Libor and benchmark reform

Global benchmark change is occurring and Australia is not exempt - will you be ready?

A tremendous shift across global financial markets is taking place as legacy benchmarks and interbank offer rates are reformed. The major global change will see the cessation of London Interbank Offer Rate (Libor) publishing at the end of 2021 but all major financial markets, Australia included, will be impacted. Already liquidity is starting to move from legacy (e.g. BBSW) to new (e.g. AONIA) benchmarks. Given the scope of the impact, planning for this transition must start now and begin with establishing a comprehensive strategy for change management.

Key impacted business and functions include capital markets, superannuation, insurance, corporate treasury, investment management and commercial lending.

Opportunities emerge

As firms start to address the impact of Libor cessation and global benchmark reform some opportunities will become apparent. These opportunities are available if firms can assess then action at a suitable time. Potentially includes:

Optimising the transition to new benchmarks considering price, valuations, credit and market risk, documentation and efficiency of transition
Create new and differentiated products
Improve customer experiences and increase customer loyalty
Make internal improvements in agility, collaboration and decision making
Tackle “while you’re at it” projects (e.g. initial margin, data remediation, etc.)

How PwC can help

The practical transition away from Libor and legacy benchmarks is market driven with different geographies preparing on similar, but not aligned, timelines. PwC’s Libor and benchmark reform specialists in territories throughout the globe can help you assess, prepare for, and execute on the transition. We work with you across the entire lifecycle of the transition, including: