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54% of financial institutions say LIBOR transition delayed by Covid

Over half of financial organisations admit they have experienced disruption in transitioning from the LIBOR interest rate-setting mechanism to the Risk Free Rate regulatory framework due to Covid

Over half of financial institutions have admitted the transition from the LIBOR interest rate-setting mechanism has been delayed by the pandemic, according to a research report from SDL, part of RWS Holdings.

While 54% of respondents say Covid-19 has disrupted the move to the Risk Free Rate regulatory framework, some 22% of financial organisations revealed they have hired translation specialists to make the deadline.

Last week (5 March), the Financial Conduct Authority (FCA) announced that all LIBOR settings will cease to be provided by any administrator, or no longer be representative, after 31 December 2021.

Jon Hart, president of RWS’s Regulated Industries division, said: “The global pandemic has made an already mountainous undertaking even more difficult for investment banks, market-makers and asset managers to get their internal processes aligned and ready for this change.

While it is encouraging that the majority of respondents have been transition planning for over a year, 40% have struggled with the implementation timelines or have not yet started to plan.”

He added: “The task at hand should not be underestimated, but the impact that the transition will have on operations can still be mitigated with assistance from external agencies – companies like ours stand ready to help.”

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