Global financial markets are preparing for the phasing out of the London interbank offered rate, or LIBOR, with the loan, derivatives, securities, and bond markets most affected. As of mid-2018, about $400 trillion worth of financial contracts referenced LIBOR in one of the major currencies. Supervisory pressure on the financial sector to reduce LIBOR inventories suggests that firms must embrace Risk Free Rates (RFRs) across LIBOR portfolios. The transition presents a multitude of challenges.
Why Use Benchmarks?
Financial market participants rely on benchmarks primarily to reduce asymmetric information about the value of the traded financial instrument underlying the benchmark … Read more