The Impact of LIBOR’s Phaseout on Technology: Maneuvering Through the Curve Highway

Change can be hard. So, it’s hard to say goodbye to LIBOR when it’s been around for so long and is used for $350 trillion worth of financial products globally. Since the UK’s FCA (Financial Conduct Authority) announced in July 2017 that after the end of 2021 it will no longer compel banks to use LIBOR as the benchmark for short-term interest rates, there has been a fog of uncertainty about what that change was going to look like.

From a technology perspective, change will come in the form of curve modelling.

In this brief Q&A, James Jockle, Numerix’s Chief Marketing Officer, meets with Ping Sun, PhD and Senior Vice President of Financial Engineering at Numerix, to discuss the true impact of LIBOR’s end on curve instruments due to the introduction of alternative reference rates, and how it will require market participants to revamp their technology architectures to accommodate new curve requirements.