Avoiding the floating rate cliff-edge: How asset management general counsels can tackle the LIBOR cessation challenge

Abstract

LIBOR’s (London Inter-bank Offered Rate) impending cessation poses several significant challenges for the asset management industry and the buy-side generally. This paper aims to assist asset management general counsels and law departments in developing and implementing LIBOR cessation action plans so that they can effectively meet the needs of their firms and colleagues in operations, risk, front office, marketing, compliance and beyond in tackling LIBOR’s expected sunset. Readers can expect to obtain familiarity with the key legal hurdles to overcome by law departments, including fallback analysis and assessment of basis risk inherent in contracts across asset classes (eg cash products, derivatives, repo etc). Specific focus is given to the practical consequences for asset managers of LIBOR transition, with an eye to arming general counsels with the information they need to ‘make the case’ for early and thorough preparation.