OCIE issued an examination initiative on June 18, 2020, regarding firms’ readiness to transition away from the London Interbank Offered Rate (LIBOR). LIBOR, widely used in the United States and elsewhere as a benchmark rate for various commercial and financial contracts, including corporate and municipal bonds, floating-rate mortgages, asset-backed securities, consumer loans, and other derivatives, is being discontinued sometime after 2021. Such disruption could have a significant impact on the financial markets and their participants, including SEC-registered investment advisers and municipal advisers.
In light of this, OCIE has identified registrant preparedness for the transition away from LIBOR to alternative reference rates as an exam priority for FY 2020. During examinations, OCIE will be looking to see if and how the registrant has evaluated the potential impact of the LIBOR transition on the firm’s business activities, operations, services, customers, clients and/or investors. For more details on how firms should be preparing, please see the Risk Alert.
Resources
https://www.sec.gov/files/Risk%20Alert%20-%20OCIE%20LIBOR%20Initiative_1.pdf