ASIC has today published Information Sheet 252: Managing conduct risk during LIBOR transition (INFO 252) on practical guidance that Australian entities can adopt to manage conduct risk during the London Interbank Offered Rate (LIBOR) transition.
LIBOR is expected to cease after the end of 2021. Although entities in Australia have made substantial changes to date, additional effort is required to ensure an orderly transition.
The guidance published today sets out regulatory expectations and clarifications on key transition issues. It aims to assist entities in establishing necessary arrangements to mitigate conduct risk associated with the discontinuation of LIBOR.
INFO 252 sets out:
- frameworks, practices, and recommendations on fair treatment of clients, representation of product performance, and client communication strategies
- ASIC’s expectation of the industry, including what we consider to be best practices
- buy-side entity specific guidance and recommendations
ASIC Commissioner Cathie Armour said ‘Firms need to apply fair judgement and professional diligence when dealing with clients during LIBOR transition. This includes having robust arrangements in place to mitigate conduct risk that may arise during the transition process. This guidance is a part of our commitment to assist the industry in enhancing the overall LIBOR transition preparedness in Australia.’
All entities with LIBOR exposures are strongly encouraged to review INFO 252 and take reasonable steps to implement the relevant recommendations.