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Industry roundup: 30 July

ARRC formally recommends term SOFR

The Alternative Reference Rates Committee (ARRC) has announced that it is now formally recommending CME Group’s forward-looking Secured Overnight Financing Rate (SOFR) term rates (SOFR term rates), following the completion of a key change in interdealer trading conventions this week under the SOFR First initiative. The ARRC’s formal recommendation of SOFR term rates is a milestone in the transition away from US dollar (USD) LIBOR, providing market participants with a transition tool and marking the completion of the Paced Transition Plan that the ARRC outlined in 2017 and has been working toward since.

The successful SOFR First convention change, along with the continued growth in SOFR cash and derivatives markets, has allowed the ARRC to recommend SOFR term rates, consistent with the principles and indicators it established to do so.

"This formal recommendation of SOFR Term Rates is an achievement for the USD LIBOR transition specifically and for financial stability overall," said Tom Wipf, ARRC chairman and vice chairman of Institutional Securities at Morgan Stanley. "This concludes the ARRC’s Paced Transition Plan and market participants now have all the tools they need as we enter the transition’s homestretch. With just five months until no new LIBOR, significant work remains and I urge everyone with LIBOR exposures to immediately take action and base their new contracts on forms of SOFR."

"With this step, market participants now have every tool they need to transition from LIBOR," added Randal K. Quarles, vice chair for Supervision of the Federal Reserve Board and chair of the Financial Stability Board. "All firms should be moving quickly to meet our supervisory guidance advising them to end new use of LIBOR this year."


Standard Chartered and ICG announce €1.45bn ESG-linked subscription facility for ICG Europe Fund VIII

Standard Chartered Bank and Intermediate Capital Group (ICG) have announced that they successfully closed an initial €1.45bn ESG-linked subscription facility for ICG Europe Fund VIII (the Fund). The lending group comprises Standard Chartered Bank, BNP Paribas, ANZ Banking Group, ING Bank, and Royal Bank of Canada. The facility will serve as a key source of liquidity for the Fund, which is dedicated to investing in mid to upper middle market European businesses. 

ICG says it recognises that environmental, social and governance issues can be a key driver of investment value and that investors have a vital and unique role to play in supporting private companies to reduce their emissions and drive the transition to a net zero economy. These values are reflected in the facility structure which integrates ICG’s ESG and climate ambitions to deliver sustainable outcomes.

Under the sustainability framework, portfolio companies will be required to set ambitious emission reduction targets aligned with a Science Based Target (SBT). SBTs are carbon emission targets aligned with the goals of the Paris Agreement. SBT’s play a vital role in efforts to decarbonise investment portfolios and support the transition to Net Zero. In addition, the Fund will implement ICG’s enhanced ESG Engagement Strategy which focuses on driving performance improvement across three key themes: climate change, employee engagement and diversity and inclusion. ICG’s Engagement Strategy incorporates best practice and is anchored by key metrics, aligned with the Sustainable Finance Disclosure Regulation.


Astorg and Bridgepoint complete Fenergo acquisition

Fenergo, a provider of know your customer (KYC) and client lifecycle management (CLM) software solutions for financial institutions, has announced the conclusion of its acquisition by Astorg and Bridgepoint. The transaction completed following approval by the European Commission. 

Entering its third chapter of growth, Fenergo reinforces its commitment to developing digital solutions that equip financial institutions with the tools to navigate the highly complex regulatory environment and fight financial crime, transforming client operations, accelerating growth and enhancing client and employee experience.

Fenergo recently strengthened its C-suite to work alongside founder and CEO Marc Murphy, who the announcement statement says will "continue to strategically steer the business towards organic and inorganic growth. Fenergo will drive deeper market penetration and geographic footprint through the continued innovation of its SaaS and on-premise platforms and product line development."

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