Parsippany, NJ – Micro Strategies, Inc. announced today the addition of a new solution to their portfolio. The LIBOR Remediation Solution is designed to assist financial institutions facing the transition from London Interbank Offered Rate (LIBOR) to Alternative Preference Rates (APR) in the wake of the 2012 events that swept through the industry.
LIBOR, which is used as the baseline for financial instruments ranging from student loans to complex derivatives, is a globally accepted key benchmark interest rate with an estimated $400 trillion worth of contracts worldwide based on its numbers.
Financial institutions who have long used LIBOR as the basis for their interest rates are now faced with the need to re-write any contracts extending beyond 2021 to reference APR.
Switching to a new underlying interest rate benchmark can produce significant gains or losses for banks depending upon individual contract terms. In addition, locating and identifying individually structured contracts tied to LIBOR will be time-consuming and can magnify banks’ risk exposure.
Micro Strategies’ LIBOR solution will allow banks to securely and efficiently identify, inventory and transition at-risk contracts. By integrating Micro Strategies’ proprietary Contract Navigator with IBM’s Watson Discovery and an enterprise content repository, the solution enables financial institutions to:
- Search through legacy repositories and shared drives for contracts
- Use AI to identify LIBOR-impacted contracts
- Transfer impacted contracts to a new content repository
- Within Micro Strategies’ Contract Navigator,
introduce workflows to facilitate the review and remediation of the impacted contracts:
- Review options
- Identify the potential costs and risks
- Manage the renegotiation of the contracts
- Obtain an overview of progress through built-in dashboards
“We recognize the risk that the phase-out of LIBOR presents for many financial institutions,” said Adam J. Storch, Micro Strategies’ Vice President, Business Solutions.
“As organizations begin this process, our solution can help them increase the accuracy of their contract discovery and data extraction while also introducing workflows that shorten the time required to review risks and renegotiate contracts.”
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