LIBOR's death raises banks' regulatory risks as time creeps by

Contents and introduction

 

Contents

Part one: 
Regulatory reasons for retiring LIBOR

 

Part three: 
Conduct risk rises

Part two: 
Challenges for banks

 

Part four: 
LIBOR regulatory divergence in Asia 

 

Introduction

 

Banks face their biggest regulatory challenge in decades as the world's most widely used benchmark for short-term rates – the London Interbank Offered Rate (LIBOR) – readies for retirement by end-2021, and for some U.S. dollar settings on June 30, 2023.

The transition to a risk-free rate will, in our view, spark sweeping operational and conduct risks that could lead to fines, litigation and loss of market share. Banks in Asia, especially in emerging markets, are among the most exposed, chiefly due to the region's fragmented regulatory landscape and heavy use of dollar LIBOR in local indexes.

The beleaguered benchmark underpins about $400 trillion of financial product globally, including bonds, loans and derivatives.

Continue to the next chapter, Regulatory reasons for retiring LIBOR.

Sarah Jane Mahmud, Senior Analyst
Bloomberg Intelligence