- CHUCK BROBST | This article urges banks – while there is still time – to incubate their activities in SOFR or other alternative reference rates, whether that means a “SOFR-plus” approach, Ameribor, OBFR, etc. Here’s why your bank should launch alternative rate lending now….
- To the CEO or the Equivalent of Regulated Institutions: As you may know, the United Kingdom’s Financial Conduct Authority announced in 2017 that it would no longer compel LIBOR panel banks to furnish data to support the determination of the reference rate known as the London Interbank Offered Rate (LIBOR) after 2021. As a result, LIBOR is unlikely to continue past the end of 2021. Efforts in the US to create reference rate alternatives are underway, as discussed below. Your institution should be carefully following these developments.
- The Federal Reserve Bank of New York recently decided to revise the composition of the Overnight Bank Funding Rate (OBFR), a reference rate measuring the cost banks face to borrow overnight in unsecured U.S. dollar-denominated money markets. Specifically, in addition to the federal funds and Eurodollar transactions currently comprising the OBFR, the OBFR now also includes overnight, interestbearing demand deposits (at rates negotiated between the counterparties and excluding deposits payable on demand) booked within banks’ U.S. offices, known as “selected deposits.” In this post, we discuss the change in more detail, the reason for including selected deposits, and the likely impact on the OBFR’s published values.
- On July 19, 2018, the International Swaps and Derivatives Association (ISDA) and the Securities Industry and Financial Markets Association (SIFMA) published a white paper entitled “Initial Margin for Non-Centrally Cleared Derivatives: Issues for 2019 and 2020” (White Paper) The White Paper addresses the “significant challenges” swap dealers face in implementing the federal banking regulator (Prudential Regulator) and CFTC initial margin (IM) regulations for uncleared swaps with their counterparties and urges swap dealers to develop strategies for compliance immediately.
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