CFOs urged not to wait on devising LIBOR transition plan

Procrastinating on LIBOR transition tasks poses dangers. “The risk of complacency is high, and it’s going to get higher,” said Tom Wipf, vice chairman of institutional securities at Morgan Stanley and chair of the Alternative Reference Rates Committee (ARRC), the body convened to chart a plan for managing the move away from LIBOR in the United States. 

Delays could mean your firm could be crowded out when it needs to have LIBOR conversations with clients and counterparties, Wipf told CFO Dive. 

Procrastination could lead to less certainty in the documents, valuation disputes, confusion in what is being communicated to clients and the potential for litigation, said Wipf. 

The British Bankers Association created LIBOR in 1986 as a benchmark for floating rate notes. Because it was based on phony transaction interest rate estimates rigged to increase the banks’ profits, it developed a problem in the financial world during the 2008 crisis, said Erin Arvedlund, author of Open Secret, The Global Banking Conspiracy That Swindled Investors Out of Billions.

Source: CFO Dive

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