Fears EU’s ‘tough legacy’ fix could tie risk managers’ hands

Proposal bans use of replacement rate in new products, which some fear could hamper hedging and novations

European-Commission

The European Union’s proposed approach to tackling Libor-linked products classed as “tough legacy” have caused concern among market participants, with some worrying it could limit banks’ ability to risk-manage the products in the future. Others are worried about a potential clash of rules on cross-border products.

The tough legacy moniker relates to products where it is impossible to insert fallback language that would switch them to an alternative rate when the Libor benchmarks end. EU

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: