Making LIBOR transition a positive, active change

Capital markets firms are at a critical point of the LIBOR transition. Switching to risk free rates from LIBOR has many hazards, such as adjusting to the compounded method of calculating interest rates, onboarding systems that can handle that model, and getting the right pricing sources to capture market data.

Passive transitioning of existing positions gives asset managers less control over their portfolios than an active transition, says Bhas Nalabothula, head of institutional rates at Tradeweb, as the active model allow portfolio managers to better reflect existing risk in a new set of positions.

With so much change occurring around rate policy and year end it is easy for firms to fall behind on the process, Nalabothula notes, and gives examples of how some firms are making the best of the process.

Published on December 15, 2021

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