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LIBOR (London Interbank Offer Rate) is the accepted reference rate for borrowing without pledging specific assets in the financial market. This reference rate points to the condition of the financial system and throws light on how central banks may shape their policy rates. Transitioning to LIBOR presents challenges of an unknown kind. These include introducing new products to recalibrate models, defining new rate strategies, and tailoring client outreach. With the kicking in of LIBOR, most global financial companies are finding it difficult to remediate several contractual agreements and other documents.
Outsource2india has 24 years of experience in providing financial support services to both large and small finance firms around the world. Our end-to-end capabilities include identifying the risky contracts, categorizing and analyzing all the data and agreements that will be affected, amending and drafting the document and comprehensive negotiation, mapping processes, meeting system requirements, etc. Our inclusive LIBOR replacement services have brought us the recognition of a reliable LIBOR transition services provider.
As a trusted LIBOR transition services providing company, we offer a range of LIBOR transition services to our clients. Some of these include -
The first step to a successful transition is to identify a firm's exposure to Libor-linked products (cash products, derivatives, etc) and other business needs. With our exposure and impact services, our experts will identify the impact of your firm's exposure to LIBOR across the product line and transactions associated with the benchmark. We deploy key risk management and valuation methods to determine and document the impact on the product lines on exposure to LIBOR.
The transition to LIBOR alternatives will lead to some hurried decisions that are likely to expose the firm to conduct risk. Firms need to identify these conduct risks and draw a plan to mitigate them. For this firms need to be clear about which products need to be offered to which groups of clients and set up clear communication with clients. We have designed risk frameworks for several firms taking into account the potential issues that may arise while transitioning to LIBOR. We leverage valuation models, regulatory guidance, and dispute expertise to build a framework on the risks involved.
With this service, we apply financial models to evaluate how the replacement of the reference rate will impact components like hedging, valuation, and collateral. We are driven by a team of quantitative analysts with vast exposure to the review of models. Besides valuation, we leverage their experience for system testing, implementation, identifying issues in advance, stress testing pertaining to the transition, risk impact, etc. Over the last 24 years, we have analyzed several specific securities and quantified their impact under different transition methodologies.
As the LIBOR transition program triggers systems remediation, firms would require a comprehensive and focused approach to testing. Testing will ensure that the complexities caused by the number of moving pieces are ironed out. We assist in testing the data integration and data ingestion layers along with the corresponding UI changes, carrying out functional testing to test systems that need to be upgraded for computing ARRs variable and regression testing for enabling the system to undergo seamless UI-level, API-level, and computation-level upgrades.
We provide our clients with a roadmap to implement a smooth and seamless LIBOR transition. The road map defines a clear set of actions for financial firms to have well-developed formalized plans to amend contracts and make a shift to alternative rates. The roadmap provides a guideline on how to remove all dependencies on LIBOR and the at the same time fine-tune their process to adapt to new rates. Our implementation roadmap provides a blueprint for the critical stage such as contract analysis, impact analysis, repapering, and remediation.
In the post-LIBOR age, financial institutions need to identify contracts that need to be amended at a speed never known to them before. This amending of contracts is not a familiar concept to many legal departments. Therefore, replacing LIBOR will affect several financial agreements in such a way that a manual approach to remediation would be an expensive and risk-prone task. The huge volumes of these agreements and the many uncertainties surrounding them add to the problem. To take on this challenge we generate and execute contract agreements with advanced technologies such as AI (artificial intelligence) & NLP (natural language processing).
The shift from LIBOR is likely to have a serious impact on the business of market participants. The fallout of the transition will not only affect taxation, accounting, and disclosures but will also trigger several conflicts that may end in litigation. Therefore, firms need to be prepared from a dispute resolution perspective. Our experts have extensive experience in handling a variety of disputes and will leverage their knowledge to extend support on many issues. We will assist you to move your counterparties to find solutions to steer your business away from conflicts, and also assist you in negotiations so that the best solution can be achieved at the fastest possible time and with the least expenses.
The absence of a calculated plan for LIBOR transition can lead to higher risks and costs. However, working with an experienced partner can assist a financial firm to plan effectively and execute a smooth shift to an alternative reference rate. We follow a detailed and phase-wise plan for LIBOR transition which consists of the following steps -
We sit with key stakeholders to find out the areas impacted by the risks. The discussion helps us gather a concrete understanding of the firm's approach to deal with the risks and identify issues that may go out of control. We also look into the contracts and harvest relevant data
Based on this understanding, we identify all possible market risks that the client is likely to be exposed to. In most cases, we have been able to discover risks that were not considered by the client. After listing out the risks, we review the risk framework against the FCA risk outlook and standard industry practices to create a detailed report
In this step, we use the anticipated risks to model the impact on specific securities. This is done under various methodologies so that the impact can be closely assessed and quantified. The solution serves as a practical recommendation on how to deal with the identified challenges. Each of the risks is mapped to a set of possible solutions to ensure no challenge is difficult to overcome
This is the stage when we do a detailed study on how market changes would amend the documentation language across securities and issuance programs. We ready the language framework for you to get a grip over the new documentation style and procedure. Further, we assist you with advanced technologies like AI for executing contract amendments with the speed it demands
We team up with our clients to tailor and execute roadmaps to success. At the same time, we monitor the changes and adaptation to the changes from a program management perspective and keep generating reports to help clients get used to the new world order
Outsourcing LIBOR transition processes can bring a host of benefits that can set you on a steady track to complete adoption. As a reputed LIBOR transition services providing company, you get many benefits when your partner with us, including -
Having been in the financial domain for many years, we have developed a highly streamlined process to take on major overhauls such as LIBOR transition in a manner that is cost-effective. We operate from developing countries like India and the Philippines and so can provide you the cost advantage without any compromise on quality.
We provide a dedicated and expert team of LIBOR specialists to help orchestrate your transition. Our specialists are responsible for the program's project management activities that include monitoring progress, following up on pending tasks, reaching key milestones, presenting status reports, and participating in all types of planning activities. Our team of specialists includes legal experts responsible for drafting new clauses and including them in the new contracts as addendums or amendments to an existing contract. We also have AI specialists to review large volumes of agreements.
We have wide experience working with several BFSI firms and boast an expansive portfolio of financial services. Besides, we have worked with a range of tech companies to manage end-to-end contract management. Therefore, our expertise in developing a structured and detailed approach to mitigating conduct risks, financial risk, and program risk, is robust enough to guarantee quick and cost-effective adoption of secured overnight financing rate (SOFR).
We design solutions to provide full lifecycle coverage to financial firms for LIBOR transition. Our solution looks into end-to-end transition needs which is what makes us provide best-in-class services. We bank on the best industry practices because we have a deep association in designing programs as per the Alternate Reference Rates Committee (ARRC).
We guarantee an exhaustive assessment for all contracts that make a mention of LIBOR and therefore are risky. We bank on an exhaustive library of indigenously developed questions to analyze the impact of the exposure. Our comprehensive process includes identifying contracts that have passed the expiry date, spotting LIBOR referenced contracts, and framing the contract as per the new language accompanied with LIBOR replacement with the new reference rate.
We bank on AI-driven contract review and analysis solutions to expedite the transition and at the same time ensure accuracy to the changes. Our solution also combines other technologies like machine learning techniques to make the processing more effective. We guarantee an unmatched speed of processing over 10,000 contracts per hour. Firms that are lagging in the transition can leverage our AI-driven solution to catch up with the changes before it becomes too late to manage.
Our experts are always up-to-date with the latest industry developments and regulatory updates. They understand the best practices involved in implementing risk-free rates. This knowledge can be leveraged to stay compliant at all times. Our professionals have a strong understanding and practical experience of compliance operations, portfolio management concerning industry best practices, and managing new market equity and debt portfolios in keeping with regulatory mandates.
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Outsource2india's financial consulting services include end-to-end documentation management, stakeholder communications, dynamic budget and cost calculators, robust tracking and reporting, defined escalation paths, resource management, and meeting blueprints. Over the last 24 years, we have been assisting our clients to develop a roadmap for several possible LIBOR transition scenarios highlighting timelines, dependencies, and pending actions. Our financial experts will work hand-in-hand with you to monitor issues related to contracts, prioritize risks, and draw models with the help of advanced analytics. Our clients bank on us as a single-source provider for all sorts of LIBOR transition requirements.
If you too are looking for LIBOR transition services in India, get in touch with our experts now.
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