Preparing Clients for LIBOR Discontinuation Scope and Challenges: Part 2 of a Murex Experts Q&A

The first part of the Q&A is available here.

What has been the biggest project management challenge for Murex?

Antonio Chebly, CS EMEA: We faced several considerable challenges. Initially, the transition was lengthy and unpredictable—transition timelines were not crystal clear. Thorough planning was impossible, especially with delays between the expected go-lives. The scope was in flux, changing regularly, and new components and regulations were introduced with time.

Quentin Guillerm, CS EMEA head of trading: Some clients came very late to Murex—despite the fact we tried to onboard them very early in the process—which triggered a bit of pressure on the delivery.

What was the biggest hurdle Murex helped clients overcome with the LIBOR cessation?

Romain Piernot, CS APAC, head of interest rate derivatives team: One regional hurdle is FX-implied indices, which were required to handle the discontinuation of SOR in Singapore, THFIX in Thailand and MIFOR in India. We had to deliver these new types of indices with tight timelines to make sure our clients—particularly those in India—could seize this new market.

QG: Timelines were tight in general. Our packaging and experts dedicated to the topic helped accelerate the build—of new indices and curves, for instance—and to get the right advisory on design choices to be made. There was also an element of the unknown: Some clients needed advisory on the cessation details and its impact. Murex provided a further level of advisory to these clients, which allowed us to be closer to them.

Were there any market events/periods of disruption that created additional headaches for Murex and your clients in the journey to move away from LIBOR? (e.g., March 2020 market disruption, 2022-23 global interest rate increases)

Benoit Abbey, linear rates trading product manager: Generally speaking, we anticipated various milestones. The foresight allowed us to avoid many additional headaches. However, there is one exception: For the CCP conversion, the conversion methodologies (for some corner cases) were communicated quite late in the process. So, we had to design, deliver and communicate our solution for these corner cases very quickly.

How many Murex customers actually used the solution in practice?

RP: For APAC, around 65 percent of our clients bought our solution. It is either used as a whole or partially depending on the scope and needs of our clients—at least the new instruments and curves, and for the large majority, the transition event.

AC: For EMEA, the Murex solution was used by 97 percent of clients that have LIBOR exposure and needed transition or clients that wanted to start trading on advanced flavors of RFR.

What were complexities of bringing the solution to the market?

RP: One major challenge for my team was that we had to deliver the solution simultaneously to many clients at the same time. This task was way beyond the core capabilities of the team. To overcome this, we had to define a standard delivery methodology.

AC: The main complexities were around capitalizing the solutions and being able to deliver solutions adapted to their instances in a timely manner. Concurrently, we had to upskill resources at the same time, ahead of the major waterfall of 2021.

How did the transition happen in practice: Was the process hectic? Smooth? Please describe it, using specific examples if useful or interesting.

QG: My role supports roughly 120 instances in EMEA, with at least 60 impacted by the IBOR cessation. In EMEA, the team makes sure all transition activities are smooth and prepared well ahead of go-live dates. For both the EOY 2021 transition and June 2023, we have proactively contacted all the client instances to ensure they have the right level of readiness several months before the event and to centralize the need for support from our client during transitions. We mobilized over-the-weekends teams of CS and PES experts to be ready in case unforeseen issues occurred.

I’m happy to share that despite the few incidents that surfaced, the whole process was extremely smooth. We received no weekend calls and post-event volume has been calm in EMEA. This result reflects product side readiness, anticipation of both client and Murex and the effectiveness of the go-to-market team. On this last point, I found our organization was very spot on: From the beginning of the process, we were able to follow the impact and the design adopted by the market; accompany our client base with the right methodology and in a scalable way despite tens of clients implementing our solution in parallel; capitalize on diverse client experience; and prepare our customer base for the transition.