The Depository Trust & Clearing Corporation (DTCC) has rolled out a centralized communication solution to support the financial industry’s transition from the Libor benchmark rates to the secured overnight financing rate (Sofr) and other new fallback rate indices by June 30 2023.
Market participants will be able to access the Libor Benchmark Replacement Index solution through DTCC ’s Legal Notice System (LENS), a repository of notices designed to report organizational actions that affect securities issues from issuers, agents and trustees, as well as via an automated data feed that will support machine-to-machine capture of standardized reference data.
With the new solution, users will be able to view information for over 100,000 debt securities whose rate is currently based on USD Libor and leverage LENS to disseminate the new alternative indices, with bulk upload capabilities. Subscribers can also leverage the solution to stay informed on Libor replacement rate information submitted by issuers, trustees and agents.
For decades, market participants have used Libor as the benchmark reference for determining interest rates for debt instruments, including structured securities, corporate debt (including money markets), and municipal bonds. Sofr, which is published by the Federal Reserve Bank of New York, was recommended by the Alternative Reference Rates Committee (ARRC) as the Libor replacement benchmark.
“Libor cessation is a significant operational undertaking that could pose risk for firms around the globe,” says Scott Longo, head of the Libor programme at State Street Corporation and co-chair of the ARRC’s operations and infrastructure working group. “DTCC’s new Libor Benchmark Replacement Index solution will be an important component of firms’ ability to efficiently update their reference data systems and communicate this information to interested parties.”
In addition to offering the new Libor Benchmark Replacement Index solution, DTCC Data Services will provide data on many of the USD Libor-impacted debt securities to market data vendors and subscribed users via automated data feeds, helping the industry prepare for the transition and facilitating increased transparency.