We came across this article in The Trade, highlighting a study conducted by risk management consultancy JCRA and law firm Travers Smith, which highlighted that only 2% of asset management firms with exposure to LIBOR have renegotiated their contracts ahead of the benchmark’s withdrawal in 2021.
In our view, this study highlights that firms have not really started thinking about the end of Libor. This is understandable, given that Brexit is the short-term focus and will consume a lot of time and resources on triage and firefighting, regardless of whether there is a no-deal Brexit, agreed Brexit, postponement, or second referendum.
Also, there are other regulatory changes coming in 2019, such as Initial Margin, that will need to be dealt with.
But here’s some food for thought:
- The end of LIBOR is being ignored, yet it’s more wide-reaching than Initial Margin and will affect virtually every OTC derivatives trade in the market.
- Three quarters of firms have not even started their renegotiation efforts.
- There is a limited amount of legal talent in the marketplace, and the price of it will be bid up as it will be in high demand.
Here’s how Vox Financial Partners can help:
Our product Opal: Repaper accelerates the contract update process while reducing the amount of people needed to support the effort. This will expedite the renegotiation process and reduce the resource burden it puts on your company. We’re here to help. Please drop us a line at firstname.lastname@example.org if you want to learn more.