- Posted by camryn_admin
- On December 18, 2020
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Lucht-Probst-Associates-LPA-migrates-to-take-advantage-of-Azure-innovation-and-security Documents are available free of charge on the link below. Language versions in German, French and Italian as well as a FAQ will soon be available. The expected end of LIBOR, that is: End of 2021, is approaching. For different currencies, alternative interest rates, known as risk-free rates, have been set as new standard market rates; SARON replaces z.B. CHF LIBOR. Open derivatives transactions that refer to LIBOR and mature after the end of legacy transactions must be converted to risk-free interest rates. Such a transition can take place, for example. B, by an early renegotiation of the transaction in question or by the agreement of robust case clauses that facilitate the transition as soon as LIBOR is suspended. FINMA recommended these two approaches in its 08/2020 guide on the replacement of LIBOR for derivatives. The same back case clauses are incorporated into new LIBOR transactions by referencing the additional definitions in the respective transactional documentation. In addition, the complementary definitions contain the definitions necessary to conclude transactions relating to EONIA and risk-free interest rates. To support and facilitate liBOR`s transition to risk-free interest rates, SBA today developed and published two documents, the Benchmark Amendment Agreement and the Supplement Interest Rates, Risk Free Rates and EONIA Definitions (Definition Supplementsal Definitions). By signing the benchmark Amendment Agreement, counterparties will support the International Swaps and Derivatives Association`s (ISDA) international standard case case clauses for their open transactions under the SMA.
Thus, the counterparties that conclude the reference amendment agreement ensure that their existing LIBOR operations are converted to safe rates, in accordance with international standards and the recommendation of FINMAs. The same applies to new transactions, referring to complementary definitions in transaction documentation.