Regulatory Alerts2020-04-23
Added · Updated
Reform of interest rate benchmarks
The Hong Kong Monetary Authority issued this letter to update Authorized Institutions on the progress of transitioning away from the London Interbank Offered Rate to Alternative Reference Rates. The regulator highlighted that approximately 30% of foreign currency assets and 11% of liabilities in the banking system reference LIBOR, with significant exposure maturing after 2021 lacking adequate fallback provisions. Authorized Institutions are instructed to monitor international developments, update their transition plans to address challenges such as liquidity and term structures, and prepare to adhere to the ISDA Protocol incorporating fallback provisions.
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