FINRA Shares Firm Practices Implemented to Prepare for LIBOR Phaseout | Practical Law

FINRA Shares Firm Practices Implemented to Prepare for LIBOR Phaseout | Practical Law

FINRA issued Regulatory Notice 20-26 to share practices implemented by firms to prepare for LIBOR's phaseout.

FINRA Shares Firm Practices Implemented to Prepare for LIBOR Phaseout

Practical Law Legal Update w-026-9112 (Approx. 3 pages)

FINRA Shares Firm Practices Implemented to Prepare for LIBOR Phaseout

by Practical Law Corporate and Securities
Published on 06 Aug 2020 • USA (National/Federal)
FINRA issued Regulatory Notice 20-26 to share practices implemented by firms to prepare for LIBOR's phaseout.
On August 5, 2020, FINRA issued Regulatory Notice 20-26 to share practices implemented by firms to prepare for LIBOR's phaseout after December 31, 2021. LIBOR's phaseout, along with the discontinuation of other IBORs, may increase broker-dealers' exposure to certain risks, and FINRA identified the phaseout as one of its risk monitoring and examination priorities in 2020. As part of its engagement with member firms to address these risks, FINRA conducted a survey on firms' preparedness for the phaseout. FINRA's notice now provides a summary of their survey results to share practices firms have implemented, which covers matters relating to:
  • Governance frameworks to manage the LIBOR phaseout.
  • Evaluating financial risk exposure.
  • Assessing operational risk exposure.
  • Reviewing and identifying options for alternative reference rates to replace LIBOR or other IBORs in securities and other contracts.
  • Staff training and customer education.
In addition, FINRA provides a list of questions firms should consider in evaluating their own preparedness for the phaseout, as well as additional resources firms seeking information on LIBOR may find helpful.
For a guide to Practical Law resources on LIBOR's phaseout, see LIBOR Replacement Toolkit.