Operationalising your IBOR Transition Operationalising your IBOR Transition Operationalising your IBOR Transition

Your planning for the new benchmark rates across banking arrangements, intercompany contracts and commercial agreements will be well underway by now, but are you prepared for the business disruption a delay with operationalising these changes will have on your interrelated accounting, system, valuation and tax processes?

• Have you considered the nature of interaction between Back Office and other business functions?
• Have you made adjustments for new pricing methodologies?
• What is the impact of changes to accrued interest calculations?
• What changes will you need to make to existing market data feeds?
• What impact will the changes have on your controls?

• Careful structuring and documentation of your hedges will be key to limit potential P&L volatility during the transition.
• Will changes to the contracts result in a discontinuation of the hedge relationship?
• How do you account for the mismatch in timing of the amendment of the hedged item and hedge instrument?

Are you appropriately considering all contract amendments when assessing whether the debt should be derecognised?

Are you including all necessary disclosures to explain the approach and impact of the transition?

Are you being offered the best market price by your banking counterparties under the new benchmark?

Have you considered the complexities around different compounding, term and lag conventions that exist with the new benchmarks?

• Current discount rates will be invalid. Have these been appropriately updated?
• How have you incorporated fair value adjustments, such as credit risk and FVA?

• Have you updated your transfer pricing policies and intercompany agreements?
• Is the pricing used still at arm’s length?

Will amendments trigger a change to the accounting/tax carrying value of a loan/derivative and give rise to taxable credits/debits?