Monday, 30 September 2019

New benchmarks, LIBOR transition and fallback.

With the increased expectation of some LIBORs discontinuation, the overnight benchmark changes and the increasing regulatory requirements related to benchmarks, a clear quantitative finance perspective on the impacts for benchmark-linked derivatives is becoming paramount.

Financial institution and the end-users of interest rate derivatives face many challenges when navigating through those changes and their impacts. The impacts are far reaching and relate to not only to the legal and operational issues but also to pricing, risk, modelling, validation and implementation in systems.

muRisQ Advisory has an extensive experience related to benchmarks and LIBOR transition. We have published on the subject since more than 2 years and have modelled and implemented the impacts in theory and in practice. We have been guest speaker at major academic and practitioner conferences in the last 18 months (see partial list).

We have help institutions in this regards in several ways:

Technical workshops

  • Public workshops. Planned next presentations: WBS Quantitative Finance conference (Rome, 16 October 2019), RiskMinds (Amsterdam, 6 December 2019)
  • In-house tailor-made workshops on the quantitative finance impacts (valuation, risk, value transfer, model validation, new instruments). Typical agenda available on our training page.


Independent impact assessment

  • We use our own production grade systems developed over the last years
  • Run existing different hypothesis for fallbacks and spreads on exiting portfolios
  • Analysis of re-papering and protocols impacts
  • Analysis of value transfer on actual portfolios



Implementation advisory

  • Support of quantitative analysis and risk groups in implementation (based on more than two years of internally developed research and systems)
  • New models development
  • Senior stakeholder support
  • New exchange traded products development
  • Reduction of existing exposure
  • Support for negotiation with counterparties