Regulators band together to urge LIBOR transition

Cathie Armour APRA ASIC RBA guy debelle rates regulation policy australian securities and investments commission australian prudential regulation authority Reserve Bank of Australia

image
image
expand image

Financial institutions need ensure they are preparing to transition away from the London Interbank Offered Rate (LIBOR) to other benchmarks, with the Australian Securities and Investments Commission (ASIC) writing to the chief executives of several major institutions to ensure they understand the impact and risk of the change.

The LIBOR is used by many Australian financial companies in their contracts and businesses processes but would not be useable beyond 2021, following an announcement from the UK Financial Conduct Authority that it would not use its powers to sustain the rate beyond then.

While the letter broadly urged institutions relying on the LIBOR to consider the impact of the transition on their businesses, it also highlighted specific actions senior management should take. These included having awareness of the size and nature of companies’ exposures to LIBOR, putting in place robust fall-back provisions in contracts referencing the LIBOR, and taking action to transition to alternative rates.

ASIC Commissioner, Cathie Armour, who, along with the regulator’s executive director, markets, Greg Yanco, authored the letter, said: “‘We encourage all firms that may have exposure to LIBOR to assess the extent of their use of LIBOR and to take timely action to plan for a world in which LIBOR is no longer available”.

Both the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of Australia (RBA) put their strong support behind the letter, with RBA deputy Governor, Guy Debelle, warning that financial regulators worldwide expected institutions using the LIBOR to be ready to transition.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

Interesting. Would be good to know the details of the StrategyOne deal....

4 days ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 2 days ago

increased professionalism within the industry - shouldn't that say, FAR register almost halving in the last 24 months he...

4 weeks 1 day ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

2 weeks 3 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

2 days 22 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

2 days 1 hour ago