One of the key finance related challenges that most corporates currently face is the IBOR reform. How can SAP technology support organizations with the consequences of IBOR reform? In this article we outline the SAP enhancements relating to the IBOR reform, discuss how to implement these enhancements, and pinpoint specific areas of attention based on our most recent SAP projects on IBOR reform implementation.
The discontinuation of the IBOR rates promises to be one of the most significant changes to the financial markets in decades. Some people argue that it will impact the financial industry even more than Brexit does.
Instruments including bonds, loans, derivatives, leases, and the construction of discount curves, could all be affected by the new reference rates. The required repapering and repricing of affected financial instruments will challenge Treasury Management Systems (TMS) providers in how they will support treasurers with the IBOR transition.
To respond to the concerns about the reliability and robustness of the IBOR benchmarks, the Financial Stability Board (FSB) recommended the development of an alternative (nearly) risk-free reference rate (RFR) in its report in July 2014.