Finastra introduces LIBOR transition calculator service

Maria Nikolova

Fusion LIBOR Transition Calculator enables market participants to calculate their own ARR / RFR based rates and interest accruals.

Finastra announced today the launch of Fusion LIBOR Transition Calculator, a service that enables banks to calculate Alternate Reference Rates (ARR) or Risk-Free Rates (RFR).

The calculator service works independently of Finastra’s commercial lending solution Fusion Loan IQ. It is built on Finastra’s open innovation platform FusionFabric.cloud.

The calculator’s open API facilitates the integration with systems that do not yet have a solution in place for calculating ARR/RFR rates, thus significantly reducing operational risk.

The calculator service independently accesses the ARR/RFR from external official sources such as the Federal Reserve Bank of New York for SOFR. It then calculates compounded in arrears rates and daily non-cumulative compounded rates, along with corresponding interest accrual amounts for a set of inputs. Depending upon the rate method chosen, the calculator has the flexibility to calculate the daily compounding rates for the whole period or only for the end date. It follows Finastra’s Fusion Loan IQ ARR calculations, which gives market participants consistent and accurate results.

Fusion Loan IQ is Finastra’s solution for commercial lending, powering 71% of total syndicated loans around the world. It alleviates the high costs of system and process redundancy within commercial lending operations, as well as increasing transparency, improving risk management and simplifying entry into new markets or business lines.

The latest version of the solution, enhanced to support ARR, became available at the end of 2019, providing banks with core capabilities to issue new loans using the replacement rates, allowing them to begin to transition their existing LIBOR portfolio safely.

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