18 June 2020: SEC plans examination initiative to assess LIBOR transition preparedness

Steven Crotch

In line with other global regulators, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) recently published a Risk Alert informing SEC registrants that it intends to examine them to assess preparedness for the transition away from LIBOR as an examination program priority for 2020.

They indicated that they intend to review the plans that registrants have developed and steps they have taken to prepare for the LIBOR discontinuation, including as applicable:

  • The firm’s and investors’ exposure to LIBOR-linked contracts that extend past the current expected discontinuation date, including any fallback language incorporated into these contracts;
  • The firm’s operational readiness, including any enhancements or modifications to systems, controls, processes, and risk or valuation models associated with the transition to a new reference rate or benchmark;
  • The firm’s disclosures, representations, and/or reporting to investors regarding its efforts to address LIBOR discontinuation and the adoption of alternative reference rates.

Underprepared is not an option.

Are you prepared? Can you stay ahead of the race to replace LIBOR? Have you identified all impacted products and contracts? Have you developed an inventory of those referencing IBORs? Are you ready for remediation and repapering? Are you prepared to explain fluctuations in valuations that will have an impact on PL, risk, and collateral?

For further information on JDX’s LIBOR Accelerator, please contact Mital Tanna or Guy Whitely in our Business Development team, or Charles Post, Katie Morgan and Walter Pytell in our Document Digitisation Lifecycle Management and Consulting Services teams.