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Jan 13, 2020

New York Department of Financial Services Publishes Letter on LIBOR Cessation Readiness

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At the end of December, the New York Department of Financial Services (the NYDFS) published an industry letter to regulated institutions regarding LIBOR cessation. The NYDFS is requiring that each “regulated institution” submit a response to the NYDFS by February 7, 2020, describing the institution’s plan to address its LIBOR cessation and transition risk.

Among the kinds of transactions identified by the NYDFS are LIBOR-linked credit transactions (including business loans, floating rate notes and bonds, consumer loans and residential mortgages); derivatives (including interest rate swaps); and securities transactions (including securitizations). The NYDFS has also highlighted asset- and liability-side exposure to LIBOR.

Specifically, the plan should describe:

  • Programs that would identify, measure, monitor and manage all financial and non-financial risks of transition;
  • Processes for analyzing and assessing alternative rates, and potential associated benefits and risks of such rates, both for the institution and its customers and counterparties;
  • Processes for communications with customers and counterparties;
  • A process and plan for operational readiness, including related accounting, tax and reporting aspects of such transition; and
  • The governance framework, including oversight by the board of directors (or equivalent governing authority) of the regulated institution.

Among the institutions covered by the requirements are depository institutions (banks), non-depository institutions (licensed lenders, money transmitters and virtual currency companies) and insurance companies.

On January 23, 2020, the Department announced that the deadline for submissions would be extended for 45 days from February 7 to March 23, 2020.

Authors and Contributors

Reena Agrawal Sahni

Partner

Financial Institutions Advisory & Financial Regulatory

+1 212 848 7324

+1 212 848 7324

New York

Timothy J. Byrne

Counsel

Financial Institutions Advisory & Financial Regulatory

+1 212 848 7476

+1 212 848 7476

New York

Le-el Sinai

Associate

Financial Institutions Advisory & Financial Regulatory

+1 212 848 7550

+1 212 848 7550

New York

Donna Parisi

Partner

Derivatives & Structured Products

+1 212 848 7367

+1 212 848 7367

New York

Patrick Clancy

Partner

Finance

+44 20 7655 5878

+44 20 7655 5878

London

Ronan Wicks

Of Counsel

Finance

+1 212 848 5258

+1 212 848 5258

New York

Tomasz Kulawik

Partner

Finance

+1 202 508 8041

+1 202 508 8041

Washington DC