There's no time like the present

Read on for Risk & Regulatory Insights

While COVID-19 has granted a certain level of respite from looming compliance deadlines, it has also churned up its share of regulatory turmoil.

Even with the Uncleared Margin Rules (UMR) timeline relaxed, preparations to transition away from the London Interbank Offered Rate (LIBOR) continue, with progress sputtering under the burden of an industry now largely working from home. Restrictive working conditions also have the potential to hamstring the implementation of new technology for UMR, negating any advantage conferred by the deadline extension.

Meanwhile, amid lockdowns and other pandemic-driven uncertainties, risk, regulations and operations professionals have their hands full with the ramifications of an historic economic downturn, global supply chain disruptions and market dislocation. The task of identifying credit risk has become a particularly opaque one as analysts struggle to gauge potential downstream hazards in uncharted territory.

 

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This guide outlines key operational challenges facing asset management firms, hedge funds, government agencies, and banks and broker dealers — and provides insights that organizations can employ right now to proactively prepare for regulatory changes and address market uncertainty.

In the realm of LIBOR, we look at incorporating fallback language into contracts and the potential impact of not doing so and discuss potential replacements such as SOFR and regulators' motivation to push for a new benchmark. We also examine the UMR extensions due to COVID-19 by Basel and IOSCO and the importance of keeping your foot on the gas and improving tech for initial margin calculations. And, in credit risk, we explore the critical need to identify signs of distress.