The industry-wide transition from London Interbank Offered Rates (LIBOR) to Alternative Reference Rates (ARRs) is rapidly approaching. Strong system integration testing practices, coupled with a comprehensive validation and verification strategy, are essential components for a successful transition. Failure to implement a robust testing framework risks inaccurate regulatory reporting, which often translates into loss of confidence of the overall program and may draw unwanted regulatory scrutiny.
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Capitalizing on the New Current Expected Credit Loss Deadline
Current Expected Credit Loss (CECL) rules represent a major change in loan-loss accounting from the legacy “incurred loss” model. Implementing these new standards will represent a whole-organization challenge, requiring extensive expertise. A recent extension to the implementation deadline provides an opportunity for smaller firms that have not yet transitioned to ensure they are doing so in a systematic and forward-looking way.
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Best Practices for LIBOR Transition Readiness
Recently, many of the various LIBOR working groups published recommendations and objectives for transitioning from LIBOR to the new ARRs. Hundreds of market participants have contributed to consultative papers and publications to assist financial institutions in addressing complex scenarios encountered as part of their individual LIBOR transition journey. To alleviate concerns and industry-wide pressures, Monticello has prepared this best practice insight paper to assist our clients in their preparation ahead of the anticipated January 1st, 2022 LIBOR end date
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The Brexit Stalemate: Are We Headed for a No Deal?
A Soft Brexit or a Hard Brexit. ‘Remoaners’ vs. ‘Brexiteers’. The Irish backstop and the cliff edge. Even the linguistic impact of the UK’s shock decision to quit the European Union on June 23, 2016 generated a level of anguish and controversy that few had foreseen. Brexit, which had dominated headlines for four vertiginous years, became a distant memory when the UK finally left the European Union on 31st January, 2020 and a global pandemic began to take center stage.
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Uncleared Margin Rule – Leveraging Deadline Extensions to Create Automated and Efficient Operations
In April 2020, the Basel Committee on Banking and Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) extended the deadline for implementing Phase 5 and Phase 6 of the Uncleared Margin Rule (UMR) requirements for uncleared over-the-counter (OTC) derivatives. At this point, US firms need to decide whether to continue their work towards Phase 5 readiness or delay their program timelines to align with the new 2021 timeline.
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Broker-Dealer Technology Upgrades – Accelerating Change in 2020 and Beyond
Fees and spreads earned from capital markets activities remain an important revenue source for many financial services firms. At the same time, the market for interest rate, equity, foreign exchange and other traded products is becoming increasingly competitive. Efficient post-trade processing and enhanced automated solutions are essentials for banks to stay competitive.
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