The end is nigh – on June 30, 2023, LIBOR will cease to exist. However, as we enter the home stretch, many firms have yet to transition to other risk-free rates (RFR) and “could face a host of operational risks and potentially higher borrowing costs,” according to the WSJ.[1] As one commentator in the article put it – it’s like a term paper in college – “it all gets done right at the last minute.”[1] Though the adage is true, it may not be sound advice.
While not all firms are prepared for this changeover, according to Reuters, as of May, “a record 91% of new dollar swaps executed… used the Secured Overnight Financing Rate (SOFR), the new newly accepted U.S. benchmark, as their reference rate.”[2] This is a positive shift from a few years earlier when the plurality of firms were leveraging Libor over SOFR.
Preparing for this Seismic Change
SS&C Advent Geneva, the portfolio management and accounting platform widely used by alternative investment firms, global asset managers, and fund administrators, is prepared for this change. We understand the significant operational impact this transition is having on our clients’ workflows and are working in close collaboration to help identify their priorities, define their needs, and understand industry guidelines.
Since the transition away from LIBOR was announced several years ago, we have written and informed - extensively - about this topic, including compiling a guide to prepare our clients for this seismic shift. The Geneva development teams have worked diligently to support a seamless transition to other risk-free rates. Within the framework of the ARRC and LSTA guidelines, we are addressing the tangible issues our clients have expressed, based on the asset types held, rather than attempting to account for hypothetical circumstances.
Transitioning with Geneva
With recent release updates and additional functionality incorporated, Geneva is prepared to support our clients’ full transition from LIBOR. Further, those who elect to upgrade can expect the core functionality necessary to begin the transition to SOFR, or other RFR, across all fixed-income security types.
As banks and investment managers continue to test new transactions tied to different rates - like Ameribor, BSBY, SONIA, and TONA, among others - Geneva clients can rest assured that SS&C Advent is at the forefront of developments and remain committed to delivering first-class service and world-class products that limit the operational risks confronting firms.
Learn more about how Geneva can help by downloading our guide for ensuring operational and technology readiness with Geneva, or request a demo.
[1] Maurer, M. Wall Street Journal. Libor’s Last Users Face Challenges as the Deadline for Its Demise Nears. (2023, June 1). Retrieved from: https://www.wsj.com/articles/libor-last-users-face-challenges-as-the-deadline-for-its-demise-nears-8f69e179
[2] Robertson, H. Reuters. US interest rate swap market embraces new rate as LIBOR deadline nears. (2023, June 6). Retrieved from: https://www.reuters.com/markets/currencies/us-interest-rate-swap-market-embraces-new-rate-libor-deadline-nears-2023-06-06/
