Bloomberg Professional Services
IBOR transition priorities for corporate treasurers in Singapore
June 17, 2020
Last week, Bloomberg and the Association of Corporate Treasurers Singapore (ACTS) co-hosted an IBOR transition webinar for corporate treasurers in Singapore, to address how the city state’s financial sector is preparing for the move away from benchmarking against LIBOR. More than 800 participants tuned in to listen to speakers from the Monetary Authority of Singapore (MAS) and the Steering Committee on the Transition from SOR to SORA share key market updates and outline industry priorities in the next phase of the transition.
Despite COVID-19, the overall end-2021 timeline for the transition from LIBOR remains unchanged, according to the Financial Standards Board’s April 15 2020 report on financial stability implications of COVID-19. Mr Leong Sing Chiong, Assistant Managing Director (Markets and Investments) of the MAS emphasized that, given recent statements from US and UK authorities, Singapore’s preparations to transition from SOR to SORA, and from LIBOR to SOFR, will have to proceed as planned on the basis that SOR and LIBOR will cease by end-2021.
Members of the sub-committees for various asset classes in the Steering Committee presented their working group updates, which focused on putting the necessary conventions and infrastructure in place, particularly for wholesale markets to build SORA liquidity and promote broader adoption of SORA market conventions in the first half of the year.
Mr Leong urged market participants to prepare early to actively transition out of legacy contracts by next year. He also shared some suggestions for companies to gear up for the transition including setting up an internal governance framework, keeping an inventory of exposures, engaging vendors early to enhance systems and infrastructure, and working with banks to gradually phase out the use of LIBOR/SOR linked products.
More importantly, speakers encouraged corporate treasurers to embrace the shift to backward-looking compounded rates, as they are inherently more robust. Market participants should recognise that moving towards compounded rates can yield benefits, and find ways to leverage them.
Paresh Bellani, Global Markets Treasurer for APAC at Cargill, summed up the way forward for corporate treasurers: “The mindset shift is important and I encourage fellow practitioners to avoid thinking that this transition is a problem for the banks to fix. We need to really understand the impact of the transition on our entire eco-system, both internal and external, and have a clear grasp of what needs to be done.”
“There is no doubt that this transition is complex, but strong leadership and coordination, open communication, along with rapid technology implementation, will help the Singapore financial markets community through this transition. Bloomberg is committed to facilitate ongoing dialogues as we believe a proactive approach, with input from all stakeholders all around is essential to making this massive shift successful,” said Steven Yankelson, Head of ASEAN, Bloomberg.
In his closing remarks, Seng Ti Goh, President of the ACTS said that the ACTS will continue to work with the regulator, industry groups, banking, treasury and financial practitioners to bring comprehensive and timely updates to the corporate treasury community.
Bloomberg is helping clients understand how their portfolios will be affected by the transition with a comprehensive suite of data, analytics, and portfolio solutions. Visit https://www.bloomberg.com/professional/solution/libor-transition/ for more information.
To watch the replay of the webinar, please sign up here.