Prepare for LIBOR Transition
Inter-bank Offered Rates (IBORs) are undergoing a period of significant change. International efforts are underway to replace the London Inter-bank Offered Rate and other IBORs with overnight Risk Free Rates (RFRs). Impacting contracts worth over $350 trillion, the challenge to financial services organizations will be significant.
A new era of benchmark rates is on the horizon
Financial services organizations are under pressure to transition from LIBOR to alternative reference rates, putting strain on internal teams who face hiring freezes, increasing work streams, and tightening project budgets due to a volatile market. Even with budgetary limitations, high-quality expertise is still a must-have to navigate the transition.
The FCA has been clear that the transition must complete by the end of 2021 and the market needs to respond. The scale of the ask is significant and the preparedness of financial services firms varies.Get LIBOR preparation help now
- Only 20% of industry participants feel operationally ready for LIBOR’s transition
- 53% of industry participants do not have the necessary talent or capabilities internally to meet the deadline
- Only 47% claim to have sufficient funding to support their LIBOR initiatives
The transition from LIBOR will be challenging
- The reform may be applied differently depending on jurisdiction, and divergent views on what actions to take will emerge.
- The deadline, outcome, and timetable are not set in legislation, creating a lack of industry focus. Firms who fail to engage may face regulatory interventions or miss market opportunities.
- Failure to update fallback provisions in standard-term legacy contracts will significantly increase the risk of contract frustration and litigation.
- Companies must take a cross-functional response and put transition teams in place, including legal, operations, IT, and pricing. Not all entities are set-up to allow centralized management of large regulatory change projects leading to delay.
- LIBOR linked contracts gained a reprieve due to COVID putting extra uncertainty on liquidity of RFRs and the ability of the sector to meet the 2021 transition date. The FCA has maintained its focus on December 2021 and The Federal Reserve is following suit.
“We can see it coming, and we know the impact of a disorderly transition would be huge. Therefore, a half-hearted effort or a failure to act would be inexcusable…”
How we help our clients
How we help our clients
Build capacity and expertise
Backfill for your existing team
Deploy integrated team solutions
Axiom’s flexible, on demand talent solutions are customized based on your business needs. With a LIBOR focused talent pool of 120+ lawyers, 94% of which have practical in-house experience, we can help:
Access world-class LIBOR-ready talent
Lawyers provided by Axiom are already engaged on LIBOR programs at 20 of our leading clients. Some of those clients have engaged Axiom lawyers for every regulatory change initiative since 2008.
Build the right team
Four out of five of our 120+ LIBOR lawyers have worked for an AmLaw 100 or top 10 investment bank and 94% have in-house commercial experience.
Work with a partner who understands your business
Axiom’s flexible on demand solutions are customizable to client needs and can be curated to suit any internal in-house teams. Axiom has also partnered with client law firms, where efficiency and cost gains can be made.
Build your team
Assisting a major financial institution on its regulatory reform “was one of the most exciting and enriching experiences I’ve had in my whole 18 years of practicing. The combination of diverse backgrounds made for fertile collaboration as each brought their own expertise.”Read more
This Harvard law grad has been working for the past three years supporting the derivatives trading business of a Fortune 100 wall street firm, helping to lead the firm through the industry-wide transition away from LIBOR.Read more
"A pressing concern for big banks is that they need people who have the legal expertise to make sure that they’re going to be in compliance.” This Tulane law school graduate and senior negotiator for Axiom focuses on compliance for major players in the financial services industry.Read more