WhatwouldthismeanforRMBclients?

What does the transition away from JIBAR mean for our clients?  

We believe that an internationally recognised and sustainable benchmark solution is vital for an efficient financial market. We therefore support the market transition from JIBAR and other affected rates in South Africa and are actively involved in industry discussions. We are contributing to the industry dialogue with regulators, central banks and industry bodies, aiming to achieve continuity for benchmark-based products, continued financial market resilience and good outcomes for our clients.

The transition from JIBAR and other reference rates in South Africa is expected to impact existing and future transactions across contract types and client segments. Adopting the new ARR will impact a range of transactions and products. Clients could expect to be affected if they have a floating rate loan or credit facility, deposit or derivative that has or may have payments linked to JIBAR or other affected benchmarks that mature after the cessation date for the relevant benchmark. This may include corporate loans and derivatives trading. The risk-free rates differ economically to JIBAR and other affected rates which will be taken into account as we work towards enhancing our product offering.

We are assessing how the transition may impact JIBAR-linked transactions and products, while we are preparing to review and enhance our product offering. We are closely monitoring market developments during this process and benchmarking against the transitions of our global peers during our journey towards reference rate reform.

The JIBAR transition is a continuing journey that is evolving as the market works towards a consensus on how to treat existing products. During this time, we will be:

• Introducing new product offerings
• Reaching out to clients on the reform plans for existing products
• Reviewing our internal systems and making the necessary changes to accommodate ARRs
• Continuing to stay close to market updates on this topic to ensure that we evolve as required 

It is important to note that with the phasing out of JIBAR and other reference rates, some products may not be available with an alternative benchmark and could be discontinued or phased out. For some products we do not yet know the exact changes that will be required, but we are working towards product offerings that are relevant for our clients’ current needs and we are taking these changes into account. We will keep our clients informed of developments as the JIBAR transition progresses. In the meantime, we recommend that clients stay engaged with the transition and consider the potential impact on their products.

• We have quantified the exposure to JIBAR per business unit, reference rate, product class and tenor to inform our transition strategy (classification of relevance and prioritisation)
• We are developing strategies for the management of market data, rates and curves supplied to both calculation engines and front-end systems
• We are assessing the potential risk as a result of the change in terms of reputation, tax, legal, operational, liquidity and accounting

What clients can do in the meantime

The discontinuation of JIBAR and other reference rates continues to evolve, however clients can:

• Review information available on JIBAR and other reference rates
• Review transactions they have that are based on JIBAR and other reference rates
• Consider the potential impact that the discontinuation of JIBAR and other reference rates, as well as the transition to an ARR may have on their business

Where can one find more information?

These websites contain and publish additional information and updates:

• MPG
• Loan Markets Association
• ISDA
• The Association of Corporate Treasurers
• Alternative Reference Rates Committee (ARRC)
• International Accounting Standards Board (Board)