How IBOR transition is both an opportunity and a threat

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4 minute read 15 May 2019
By

Shankar Mukherjee

Ernst & Young – United Kingdom Financial Services Advisory Partner

Banking & Capital Markets transformation leader. Passionate believer in the ability of better risk management to drive business growth.

4 minute read 15 May 2019

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Our IBOR transition leaders Shankar Mukherjee and Anthony Kirby discuss the impacts and opportunities arising from the IBOR transition.

Benchmark reform is high on the agenda for financial institutions, and the upcoming transition from interbank offered rates (IBORs) to alternative reference rates (ARRs) tops the list.

There’s a growing sense of urgency among financial services firms to act after the recent announcement by the UK’s Financial Conduct Authority (FCA) that companies need to end their reliance on the London Inter-bank Offered Rate (LIBOR) by end of 2021.

Our IBOR transition leaders Shankar Mukherjee and Anthony Kirby discuss the impacts and opportunities arising from the IBOR transition.

The next steps for IBOR transition

In this video Shankar looks at the next steps that banks must take as part of the IBOR transition. He begins by looking at the likely scenarios post-transition and the implications of each.

Shankar also explores the possibility of intermediate benchmarks that could be used as part of the transition process and the timings of transition by different segments of the market.

IBOR transition: impacts for global markets

In this video Shankar looks at what is driving IBOR transition – in particular the EU Benchmark Reform initiative and the IOSCO Principles. A key challenge that banks face is that the transition could potentially happen at different times for different currencies and products.

He also looks at the potential for fragmentation of global capital markets as a result of the transition. Finally, Shankar explores the operational challenges that banks face as they tackle the transition.

How asset managers can prepare for IBOR

In this video Anthony looks at which parts of the asset management industry are most advanced with their planning for IBOR transition. He explores the options for replacement benchmarks, where the biggest impacts will be and what firms are doing now to prepare for the transition. Importantly Anthony also covers who we expect to be bearing the costs associated with IBOR transition and the role vendor solutions might play.

Summary

Benchmark reform is high on the agenda for financial institutions, but how can firms prepare for the IBOR transition and what are the opportunities it presents?

About this article

By

Shankar Mukherjee

Ernst & Young – United Kingdom Financial Services Advisory Partner

Banking & Capital Markets transformation leader. Passionate believer in the ability of better risk management to drive business growth.