Are these the last days of LIBOR?

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The journey toward alternative benchmarks

Benchmark interest rates are a core component of global financial markets, influencing borrowing and lending for all types of market participants across a myriad of financial instruments. Regulatory and advisory bodies, working with market participants in various jurisdictions around the world, have begun releasing plans to retire existing benchmarks and begin the process of developing replacements. This culminated in the UK Financial Conduct Authority’s decision to no longer compel panel banks to participate in the LIBOR submission process after the end of 2021 and to cease oversight of the benchmark rates.

In this Financial Markets Insights, we highlight some of the numerous challenges that will need to be addressed as the future of LIBOR remains uncertain and the journey toward alternative benchmarks progresses.

10 key challenges in the quest to replace LIBOR

  1. Benchmark rate term structures
  2. Global consistency
  3. Liquidity of new and legacy products
  4. Credit spread differential
  5. System infrastructure
  6. Fall back provisions – Derivatives
  7. Fall back provisions – Corporate lending
  8. Fall back provisions – Debt and floating rate securities
  9. Benchmark rate for hedging
  10. Tax consequences

How PwC can help with LIBOR

PwC’s established global network of specialists deeply understands key LIBOR-impacted businesses such as:

  • Capital markets
  • Commercial lending
  • Retail banking and wealth management
  • Investment management
  • Insurance
  • Market infrastructure
  • Corporate treasury

We work with you to provide support across the entire lifecycle of the transition, beginning with mobilization and governance, impact assessment, definition of remediation work streams, contract management and remediation, client outreach, systems and process changes, risk and valuation model changes, and managing related tax and accounting implications.

Contact us

Frank Seravalli

Financial Markets Practice Leader, PwC US

Prakash Mahtani

Director, PwC US

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