IBOR Transition

The purpose of information is to provide Riyad Bank’s customers and counterparties with an overview of the discontinuation of the London Interbank Offered Rate (“LIBOR”).

The G20, in 2013, authorized the review of key benchmark rates by the Financial Stability Board (FSB). In July 2014, FSB published its report with the below recommendations:

  • Strengthen the IBORs by anchoring them to a greater number of transactions and improve the processes and controls around submissions; and
  • Identify Alternative Reference Rates (ARRs) and encourage derivative market participants to transition new contracts to an appropriate ARR.

This is known as the ‘multi-rate approach’ – where a new ARR is developed alongside the existing IBOR.

In July 2016, the FSB’s Official Sector Steering Group (OSSG) formally launched an initiative, under the leadership of the International Swaps and Derivatives Association (ISDA), of improving contract robustness to address the risks of discontinuing LIBOR.

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