| Reported today on Finance Feeds
For the full article visit: https://financefeeds.com/switzerlands-finma-warns-risks-stemming-transitioning-away-libor/ Switzerland’s FINMA warns of risks stemming from transitioning away from LIBOR Inadequate preparation for the replacement of LIBOR interest rates, including Swiss franc LIBOR, represents a key risk, according to the Swiss regulator. The Swiss Financial Market Supervisory Authority (FINMA) has earlier today published its Risk Monitor. The report provides an overview of what FINMA believes are the most important risks currently facing supervised institutions and describes the resulting focus of its supervisory activity. Among the main risks, according to the regulator, are those related to the discontinuation of LIBOR. LIBOR benchmark interest rates continue to be widely used in financial instruments, FINMA notes. Inadequate preparation for the replacement of LIBOR interest rates (envisaged by the end of 2021), including Swiss franc LIBOR, hence represents a key risk. FINMA has identified three specific risks in connection with the replacement of LIBOR interest rates: legal risk, valuation risk and risks in connection with operational readiness. The legal risks arise in particular from adjustments that may be needed to any agreements or contracts based on LIBOR interest rates which expire after the date on which these rates are replaced, as well as from potential legal disputes with clients that may ensue as a result. Valuation risks stem from the changeover from LIBOR interest rates to alternative interest rates and the associated yield curves combined with the high volumes in the derivatives and cre |
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