A Tale of Two Standards
It’s a classic tale of two cities, formulated and fit into with variance of love and chagrin by financiers around the world: LIBOR and SOFR.
Much of the ruckus has begun to mount as year’s end approaches. By 2021’s conclusion, the expectation is a total put-to-pasture for the old London Interbank Offered Rate (or, LIBOR). This comes as no surprise to those who were around in the industry around the early 2010s, when accusations of rate manipulation ran rampant.
In 2017, the Financial Conduct Authority felt they had enough to go on. Enter: the challenger, and new kid on the block, SOFR.
SOFR, or the Secured Overnight Financing Rate, looks to improve upon the old offerings of its soon-to-be deprecated competitor.
Partnering in the SOFR World
The conclusion that simplicity is part and parcel of any transition in the world of corporate finance would be a fool’s conclusion indeed.
As banks and financial institutions wrestle with the symbolic slaps on the wrist from regulatory bodies and the newest expectations, even more resource-intensive and administratively-heavy will be the cost implications of things like term rates, risk-free adjustments, and by extension taking careful measures to avoid designating champions when acting as a contract party.
Separate the trees from the forest
Part of the updates to your loan operations and strategy for maneuvering the market will not only be in the vein of traditional legal and administrative business considerations, but also how streamlined and modernized your technical stack is.
Forest Park acts as a partner — a joint creator with your organization — as we work together to cover your six while you handle the ripples and waves of the market-at-large.
With LoanOS, we seek to build and cultivate new experiences for your personnel and remove the monolithic immobility of archaic, deprecated systems, better befit for appearances in a Seinfeld rerun.
After all, agility is our specialty — so you can truly Be Liquid.
