When asked who is leading your
LIBOR transition program, you say:
A
[Name] is the lead and has pulled together an enterprise working group
b
We have many leads from each of our businesses and functions
c
Maybe someone from rates. Or legal. I don’t know
1
Your firm is currently under the
assumption that:
A
LIBOR discontinuation is a certainty; we have defined a base-case set of outcomes, but will monitor and adapt accordingly
b
LIBOR’s longevity is uncertain, but we will wait and see what happens
c
2
LIBOR will continue. Why would we assume anything else?
You’re drafting a contract for a new
LIBOR-based issuance. Your template:
A
Includes disclosures on discontinuance of LIBOR and new fallback language with trigger, alternative reference rate, and spread methodology
b
May or may not consider discontinuance for LIBOR and/or new fallback language
c
3
Is the same as usual – use LIBOR and if it's unavailable use Prime, last available LIBOR or poll a number of banks
LIBOR is permanently discontinued
today and you need to quantify the impact to your firm. You:
A
Run a report that shows notional exposure to LIBOR, and potential risk and value impact across various scenarios
b
Build on a static report of LIBOR-dependent products and processes
c
4
Launch an urgent firm-wide exercise to pull data and start crunching; this might take a while
It’s 2019. Regulators ask for your plan to address the discontinuance of LIBOR
(as the UK regulators did in Q4 2018). You:
A
Refresh your existing response plan
b
Pull together everyone who has worked on the transition in some capacity and start compiling activities
c
5
What plan?
lion
Mostly A
Organizedand prideful
Congratulations! You are ahead of the pack, and on your way to building a strong LIBOR transition program. Your firm is committed to supporting the transition and is well informed. There is still a lot to be done, so keep up the forward momentum while watching out for industry developments and unknown unknowns!
turtle
Mostly B
Slow and steady
Moving in the right direction, there is still
a bit of hesitance in committing to the transition given the number of uncertainties. However, there are a number of “no regrets” efforts that your firm can focus on to stay in good shape for the transition
ostrich
Mostly C
Head in the sand
It’s not too late! While LIBOR transition has not been at the top of the management agenda for your firm, this is the time to begin focusing. Get involved in industry discussions and consider what you need to do to build awareness and support within the organization to get mobilized