July 8, 2020
LIBOR Transition Compliance Risks
On June 18, 2020, the Office of Compliance Inspections and Examinations of the United States Securities and Exchange Commission (OCIE) announced an exam initiative and issued a subsequent Risk Alert about LIBOR transition preparedness. LIBOR, formerly known as the London Interbank Offered Rate, has been used globally as a reference rate for a variety of investment products and services since 1986. The transition away from LIBOR will likely occur after 2021 and may pose material risks for groups like SEC-registered investment advisers and broker-dealers.
OCIE issued a list of items to assist with the transition to an alternative reference rate in the coming years. Key takeaways for how to reduce compliance risks associated with the transition are below:
WHAT DOES THIS MEAN FOR ME?
OCIE will continue to publish information about the transition away from LIBOR and is calling for market participants to share information about potential effects of the process at LIBOR@sec.gov.
LIBOR transition preparedness is included in OCIE’s 2020 Examination Priorities and will become an area of greater focus as the transition to an alternative reference rate approaches. Beginning preparations now will decrease risks during upcoming routine examinations.
If you have concerns about LIBOR transition preparedness, Fairview can help jumpstart your process. Contact us today for more information about preparing LIBOR-related documentation and adopting or amending compliance policies and procedures.