The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services, today announced that it has launched its new LIBOR Benchmark Replacement Index solution to support the industry’s transition from LIBOR benchmark rates to Secured Overnight Financing Rate Data (SOFR) as well as other new fallback rate indices by June 30, 2023.
Market participants will be able to access the 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,” said Scott Longo, head of the LIBOR Program 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.”
“DTCC welcomes the opportunity to support our clients and the industry as the US market transitions away from LIBOR. We are uniquely positioned to deliver this new service, providing the industry with critical information in an efficient and standardized manner,” said Ann Marie Bria, Managing Director, Asset Services Business Manager at DTCC. “With the solution now live and centrally communicating LIBOR benchmark replacement rates, we are ready to partner with market participant firms as they work to achieve compliance by the June deadline.”
Users benefit from:
• Single User Interface (UI) to communicate all LIBOR index replacement needs for applicable securities, in one place via a flexible web UI.
• Standardized data to streamline communications and enable machine-to-machine interactions.
• Flexible output, providing users with the ability to choose how they would like to receive the data, for example within the LENS service or via machine-to-machine file.
“This solution offers an innovative way to manage the LIBOR transition via a centralized, standardized form of communication,” said Oliver Bader, LIBOR Program Director at BNY Mellon and Co-Chair of the ARRC Operations and Infrastructure working group. “We’re excited to continue working with DTCC, ARRC, and other market participants to help reduce operational risk for the financial industry.”
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.
Added Tim Lind, Managing Director of DTCC Data Services, “As a key infrastructure provider, DTCC facilitates increased transparency between issuers of securities and investors that own the debt and equity of public companies. The cessation of LIBOR impacts trillions of dollars of debt and is another example of the critical role DTCC plays in furthering the evolution of market structure.”