Libor solution of the year: Adenza

Asia Risk Awards 2022

RG Manalac, Adenza

Throughout the Libor transition process, Adenza has concentrated on providing a holistic, comprehensive and unified approach to the complex reform.

This has been highly appreciated by clients. This year the platform has been further refined, to include wider support for products linked to new risk-free rates (RFRs) and improved discounting among clearing houses. Adenza has also released a new set of tools to help with the migration process and to support fallback pricing.

“The Libor transition stands out as a unique change because of its breadth … and because it directly and heavily impacts organisations’ operations, front to back,” notes Adenza. “Our unique framework enables clients to assess, manage and efficiently comply with the complex Libor transition across their trading, pricing, curve-building, hedging, risk and clearing operations – on a single powerful platform.”

As the market evolves towards an RFR landscape across products, clearing channels, client segments and currencies, firms continue to face significant challenges. In particular, the state of change heavily impacts the risk management and valuation of hybrid portfolios, collateral funding rates and market data.

Adenza points out that piecemeal efforts to tackle the Libor transition process have generally failed, making it harder for firms to meet looming milestones. This is why Adenza advocates a much more strategic approach.

Adenza’s Calypso offers full support for discounting, valuation, rate rest, trade conversion and fallback pricing. Total cost of ownership (TCO) optimisation is also possible. The Calypso technology is fully cloud-enabled.

“Ours is one of the most comprehensive front-to-back solutions on offer,” says Adenza.

Customer value

Client testimonials underscore the value the market has found in Adenza’s Libor transition solution.

A technology manager within one large Australian financial institution, which is a long-standing client of Adenza, says: “Calypso continues to be our strategic platform for our rates and credit business globally and Adenza has been a trusted and valued partner in our continued journey of system simplification and responding to an ever-challenging regulatory environment.”

This firm has been working hard to simplify its business in anticipation of the Libor reform, and has enlisted Adenza’s help to do so.

Part of this streamlining effort involved the decommissioning of more than 15 internal and vendor systems around the globe, which were all moved on to the Calypso platform. To further maximise efficiency, the company also consolidated its data into a single system of record.

Such simplification allowed the Australian institution to transition to the new benchmark regime in a more strategic and collaborative way than would otherwise have been possible. According to Adenza, this allowed the firm to capture market share by bringing new risk-free products to market faster than its competitors.

By the end of 2021, this particular organisation had successfully completed the Libor transition and migrated both fixed income and swaps. It is now in the process of implementing Calypso’s solution for cleared trades, which will help reduce TCO as well as support end-to-end clearing risk and processing.

A senior treasury manager in the New Zealand branch of a major Australian bank is also highly appreciative of the work that Adenza has been doing.

“Adenza’s team worked closely with [our bank] to move away from Libor well in advance of the required deadline … Adenza has provided us with good quality support at every step, from implementation, evolution, upgrade and extension to day-to-day and after-hours activities,” he says.

He adds that the detailed business and market knowledge of the Adenza team enabled the organisation to complete all projects it was undertaking in 2022 (including Libor reform, initial margin changes and compliance with a new New Zealand law on outsourcing policy) in a timely manner.

“On top of this, Adenza professional services teams play an advisory role, which helped [us] to accurately assess how new technologies and methodologies … can help us to get additional value,” says the senior treasury manager.

Asia traction

Adenza continues to gain traction elsewhere in the Asia region, too.

Over the past 12 months, one of Thailand’s largest commercial banks, a top-tier private bank in India, and two regional banks in Korea have selected Adenza’s Calypso Libor solution to efficiently transition to the new global RFRs’ benchmarked landscape.

“We are seeing significant growth in the Asian market for the adoption of our cloud-enabled front-to-back platform, which helps financial institutions modernise their legacy systems to streamline processes and support the Libor transition,” says RG Manalac, managing director for Asia-Pacific at Adenza. “We look forward to continuing these collaborations as we deliver for our clients and engage with financial institutions across the Asia-Pacific region.”