Notable Passages From the Presentation
On Various Phases of LIBOR Decommissioning
What’s key is developing and defining your transition plan. As part of that, understanding what your exposures are and what the impacts are, and with that, understanding the risks that include valuation risks, operational risks, reporting risks and conduct risks in terms of clients and the impact it has on them. Financial modeling and making sure those work and provide results that aren’t unexpected and makes sense. Remediation of contracts where language needs to be remediated, and disputes where language wasn’t written with the LIBOR transition in mind, or where there could be different interpretations. – Mark Turner
On Communications
If a regulator comes in to enquire about your LIBOR transition readiness or other stakeholders want to understand how you’re prepared for it, your documentation is critical in terms of clearly communicating to stakeholders what you did, and why you’re prepared for the upcoming LIBOR transition. We are having a lot of conversations with clients around the LIBOR discovery process and making sure all LIBOR instruments are considered. Further as it relates to documentation, if you have a LIBOR transition plan, how are you tracking against it? – Jennifer Press
On Contract Remediation
Talking to different stakeholders is key. You need to know how many contracts you have and where they are. What are the key drivers behind the contract? What does it mean to the business when you change that rate? Who is the counterparty? What is the supply chain risk? Often it’s internal audit that needs to get involved. The extraction process is the next piece in going forward. That could be the case if there are a lot of contracts, both physical and electronic. If the volume allows, you can use technology for this. Next you need to review contracts and find those key clauses. Finally, remediation. What’s the alternative we’re willing to use? Leveraging technology allows you to reach out to the necessary resources. – Rich Vestuto
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