US should clarify regulatory, tax, accounting treatment of Libor switch, industry says

18 June 2019 9:30pm
US agencies must clarify the regulatory, tax and accounting treatment of a market participant’s switch from Libor in an existing, or legacy, derivative contract if a 2021 global deadline for dropping the scandal-plagued benchmark is to be met, an industry cross-section said.

“That relief will help the market transition and get more people to stop sitting on their hands and start moving their legacy books,” Jason Manske, MetLife’s derivatives and liquid markets chief, said at a conference* last week.

“It’s very important that we establish certainty,” said Tom Deas, head of the National Association of Corporate Treasurers. “It’s a bad day for a corporate treasurer if you’re trying to get out in front of this transition and you’ve switched over an agreement, and you find out you’ve generated an unexpected tax hit which causes earnings to miss that day.”