The reality is that the vast majority of firms will require front-to-back, cross-functional change to transition away from IBOR.
The transition from IBORs to RFRs is one of the most complex, high risk, post-crisis industry initiatives that we have seen over recent years.
Collateral is one of the functions that will be aggressively hit by IBOR transition. Collateral IBOR challenges are driven by the renegotiation of existing contacts and consumption of the RFR data into key systems.
Unfortunately, unlike the ISDA Protocol for ISDA Master Agreements, no industry mechanism exists to update the terms of key collateral documentation (e.g. CSAs, GMRAs, GSLAs, etc). These must instead be renegotiated and executed bilaterally, including any valuation adjustments due.
Key data feeds used by collateral and all other functions will also require updating, which will need careful management of timing and downstream dependencies to ensure no negative knock-on effect to various batch processes and BAU.
At Tonic we are genuinely expertise-led across all post-trade domains, including IBOR.
Our industry specialists also hold deep experience in successfully delivering complex change for key post-trade regulations, across both the sell-side and buy-side.
What does that actually mean?
We already come armed with the toolkit to accelerate the right solution decisions and delivery for our clients, ensuring a successful IBOR transition and minimising any business impact.
Bearing in mind the time and capacity constraints all firms will experience, the speed of effective decision-making will be a critical success factor in any IBOR transition programme. At Tonic we have extensive experience delivering and leading front-to-back cross-functional regulatory change programmes to global clients.
We leverage our expertise to deliver fit-for-purpose solutions that minimise the commercial and operational impact of IBOR transition for our clients. Our specialists have been here many times before, quickly understanding the client’s requirements and sharing all available options for strategy, target operating models and vendor solutions to meet the client’s IBOR objectives. In addition, we open up our full post-trade industry network to our clients, including vendors, market participants and industry bodies. This allows our clients to further accelerate both the right IBOR decisions and their delivery.
At Tonic we provide a flexible set of modular IBOR services, tailored to our clients’ needs.
This means that, regardless of the stage of your firm’s IBOR transition, our specialists can accelerate your readiness through the delivery of specific modules, by leading the full end-to-end delivery or taking on specific needs as they arise.
At its core, the Tonic IBOR Health Check is an accelerated Impact Assessment to deliver our clients a single, aggregated view of their full IBOR scope.
The IBOR Health Check is therefore a critical early deliverable for our clients to quickly move onto IBOR transition planning and solution decisions, which will be key to their transition success. The Health Check contains two key deliverables. Tonic can lead one or both of these deliverables, as required.
1. A deep-dive internal scope analysis across products, systems, functions and processes per IBOR
2. Client outreach exercise to confirm key programme assumptions and validate the IBOR approach per counterparty
Once complete, the Health Check results enable our clients to gain a comprehensive view of their full IBOR delivery scope, right down to the lowest level of detail.
Only then will firms be able to rapidly move onto planning their IBOR transition with confidence.
