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LIBOR to RFR Transition Strategy

LIBOR to RFR Transition Strategy

The end of 2021 is fast approaching - and marks when the London Interbank Offered Rate (LIBOR) may cease to exist. Now is the time to assess whether your organization will be ready for this seismic shift.

This practical paper looks at the three key points that need to be front-of-mind for firms in the months ahead, and provides action steps towards a successful transition:

  1. Reliance on LIBOR is unsustainable, change is coming: The availability of LIBOR beyond 2021 is uncertain - there is a possibility it will continue in some form - but global regulators have signalled that organizations should not rely on this and need to plan for the switch to alternative RFRs.
  2. The market must act collectively and purposefully: The pace at which the industry can create markets, build liquidity and infrastructure for alternative RFRs, will directly impact the speed and success of the transition. For it to be successful, effective co-ordination is key with all parties.
  3. Understanding the variety and interconnectivity of risks is essential: To meet the industry 2021 timeline, planning needs to be underway. The scale and complexity of this transition should not be underestimated.

    A full understanding of the probable transition scenarios, firms' key risks and the potential roadblocks is a key starting point. From this, a clear strategy for your firm can be developed to help ensure a smooth planned transition.

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