埃森哲-2019年伦敦同业拆借利率调查报告（英文）-2019.10-18页_2mb

LIBOR Transition Summary

Core Content

The 2019 LIBOR Survey by Accenture highlights the financial services industry's mixed state of preparedness for the transition away from the London Interbank Offered Rate (LIBOR), which is set to cease by the end of 2021. The survey interviewed 177 firms, including investment banks, commercial and retail banks, corporates, asset managers, and insurance companies, to assess their readiness and strategies for this significant change.

Main Findings

• Only 18% of firms describe their LIBOR transition programs as mature, despite 84% having formal plans.
• Less than 20% of respondents claim to be operationally ready for the transition.
• Regulatory uncertainty is a major concern, with 47% of firms not confident about regulatory expectations across jurisdictions and 21% having no contact with regulators regarding the transition.
• Legal and risk management functions are underprepared, with only 15% of legal teams and 14% of risk management teams feeling ready for the transition.
• Funding levels are low, with 45% of firms stating they have not allocated or plan to allocate sufficient funds for the transition.
• Only 13% of firms expect to spend over $200 million on the transition, while 23% plan to allocate funds to product design and 17% to risk models.
• There is a significant lack of alignment between different business lines and functions, leading to fragmented efforts and limited clarity on the overall impact of the transition.
• Regulatory bodies (FCA, SEC, and Fed) emphasize that the 2021 deadline is not likely to be delayed, and firms should not assume LIBOR will continue beyond this date.
• Some firms believe that the transition may continue into 2022 or 2023, indicating a lack of consensus and urgency.
• The shift to risk-free rates (RFRs) such as SOFR and SONIA is expected to bring significant changes, but liquidity in these rates is currently low, with only 2.5% of contracts referencing RFRs as of Q1 2019.
• Firms with mature programs are more likely to see the transition as a strategic opportunity and to engage with regulators.

Key Challenges

• Overconfidence among some firms may lead to underestimating the complexity and risks of the transition.
• Siloed approaches to transition planning and execution are common, with limited integration across business lines and technology functions.
• Operational, technological, and reputational risks are significant, and firms are struggling to measure and manage them.
• Lack of clarity on the required actions, funding needs, and regulatory expectations is widespread.
• Passenger firms (corporates and asset managers) are less proactive, waiting for the "drivers" (investment banks) to lead the transition, which may result in increased costs and risks for them.

Recommendations

Accenture recommends a five-step process for firms to effectively manage the transition:

1. Impact Assessment: Conduct a top-down analysis to identify and quantify risks, impacts, and changes across products, contracts, processes, and technology.
2. Mobilize Transition Program: Assign dedicated staff, senior sponsors, and program leads to ensure a coordinated effort.
3. Develop Transition Strategy: Align the strategy with regulatory timelines and milestones, and ensure it includes product and technology planning.
4. Create Budget and Communications Plan: Plan for the necessary financial resources and define internal and external communication strategies.
5. Risk Management Plan: Develop a plan to mitigate operational, liquidity, and basis risks throughout the transition.

Additionally, 10 "No Regret" actions are suggested to help firms prepare effectively, including:

• Developing a baseline scenario for the transition.
• Creating a transition governance model.
• Digitizing LIBOR contracts and establishing a central database.
• Engaging in client outreach.
• Ensuring robust risk management.
• Implementing product and portfolio strategies referencing new RFRs.

Conclusion

The transition from LIBOR is a complex and critical process that requires comprehensive planning, cross-functional collaboration, and proactive engagement with regulators. While many firms have initiated plans, the lack of maturity, funding, and clarity indicates that the industry is not yet fully prepared. Firms should recognize the risks of underpreparedness and take immediate steps to ensure an orderly and effective transition to alternative benchmark rates.