Preparation needed for LIBOR transition
Corporate News - 15 May 2019
With the discontinuance of London Interbank Offered Rates (LIBOR) expected after 2021, Australian financial institutions have been urged by the Australian Securities & Investments Commission (ASIC) to ensure they are prepared for the transition away from LIBOR to alternative benchmarks. Similarly, entities that have existing financial contracts and arrangements in place with reference to LIBOR are urged to consider whether they need to vary those arrangements.
ASIC has advised that users of LIBOR should carry out a risk assessment as soon as possible to determine LIBOR exposure and what changes may be required to ensure that risk management, operational processes and IT infrastructure are all supported in the transition. Going forward, the Reserve Bank of Australia has suggested that users consider whether bank bill swap rates (BBSW) and the cash rate are suitable alternatives to LIBOR for their financial contracts.
Please contact us on +61 8 9321 4000 if you have any questions on the proposed changes.