Neil Macdonald, Managing Director-Wealth & Asset Management Consulting commented on LIBOR transition plans.
Today is the deadline for banks and insurers to submit their LIBOR transition plans to the regulator; asset managers are not part of the exercise despite the fact it will impact every aspect of their business from products to performance to communications.
Commenting, Neil Macdonald, Managing Director, Wealth & Asset Management Consulting says:
“That asset managers have not yet been engaged formally in a LIBOR planning exercise creates a risk that the buy-side may not be doing the thinking it needs to on this topic.
“The impact of abolishing LIBOR on banks is obvious, but for many asset managers it could be just as significant. Some asset managers have estimated the transition will run to costs of around £200m; in a sector where managing expenses has become essential for survival, that is no small sum!
“The end of LIBOR won’t just impact the securities that portfolio managers invest in, it will impact portfolio management systems, performance reporting systems and investment management agreements with clients. Any mandate or metric relying on LIBOR will need to be recognised and recoded. And then there’s the communication piece – with clients, counterparties and service providers – which on its own is huge. You just have to look at the ongoing debate over investor disclosures and literature to realise that engaging people is hard and the challenge increases tenfold when it comes to an issue as complex as LIBOR.”
See details of the FCA & PRA Dear CEO LIBOR letter here: https://www.fca.org.uk/news/statements/dear-ceo-libor-letter
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