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Monday, December 04, 2023

Libor Comment: What Next for FIs

Selwyn Halbertsma, Director Business Consulting at Synechron, comments:

As the financial industry prepares to see Libor phased out due to its many vulnerabilities, it also must ask critical questions regarding how this will change daily operations and look to the FCA for clarity on transitioning to a new system. For example, agreements made under Libor, and those with long running derivatives transactions with maturity dates after the proposed phase-out of Libor in 2021, will have to be updated. Financial firms are left more confused when looking to new deals whether to avoid any variable interest rates linked to Libor if it will extend past the phase-out date, and if so, what the alternative might be, or if these will be updated automatically. A key part of transitioning will be to prioritize benchmarking transparency to avoid future scandal as seen with Libor. Guidance from the regulators will be key in preparation for the transition.”

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