In the first article of this series, we shared essential steps to prepare for the upcoming JIBAR (Johannesburg Interbank Average Rate) to ZARONIA (South African Rand Overnight Index Average) transition.

Now, it’s time to move beyond preparation. The regulatory clock is ticking, and it’s crucial to kick-start your contract remediation programme before deadlines loom too close.

Justin Ridl, MD and Head of Financial Services at Cognia Law

Where we stand with the JIBAR transition

The South African Reserve Bank (SARB) has sent its “Dear CEO letters” to financial institutions, outlining expectations for managing the JIBAR cessation and transition. A follow-up request will soon require certain financial institutions to confirm their readiness through a contract-mapping exercise across all affected products. This step will help determine the scope of the required contract remediation for financial institutions to ensure their readiness for the upcoming transition deadlines.

Determine the scope of the required contract remediation for financial institutions to ensure their readiness for the upcoming transition deadlines.

Cognia Law has been actively assisting clients in these critical early stages with workshops focused on:

  • Assessing current preparedness against SARB’s expectations
  • Identifying key priorities
  • Planning resources and budgets
  • Outlining next steps to mobilise contract remediation

The time for strategic planning is over: it’s time for action.

The countdown has begun

While most of the business units we’ve engaged with at institutions in the financial services sector have developed roadmaps for repapering JIBAR-linked contracts, many are still in the impact analysis phase. With the SARB’s transition timelines firmly in place, there is no room for delay. Take the “Dear CEO” letters as the regulator’s signal to finalise your strategy and move swiftly into action. In the SARB’s estimation there are in excess of ZAR 40 trillion* JIBAR referencing contracts currently in the market, and just over 2-years left to complete transition. (*SARB JIBAR Transition Market Practitioners Group Conference, Sandton, 21 August 2024.)

Phased implementation: the smart path forward

An effective remediation programme requires a phased approach to avoid budget overruns and missed deadlines. Our experience, including the successful LIBOR transition, shows that the most efficient route involves:

  • Finalising an inventory of affected contracts
  • Setting and securing accurate budgets
  • Moving quickly from analysis to execution

Act now to keep pace with the market

Our recent workshops have shed light on what needs to be done in the remainder of 2024. Financial services firms must pivot from strategy to implementation. To meet regulatory requirements and manage a smooth transition, teams need to focus on:

  • Finalising the contract repapering scope and securing necessary budgets
  • Deploying project managers and service providers to firm up plans
  • Confirming regulatory obligations and timelines
  • Establishing the right resourcing strategy – balancing internal and external support
  • Implementing effective change management with stakeholders to ensure a smooth process

Don’t miss the deadline: ensure your team is ready

The time for careful planning is over; the time for decisive action is now. Make sure your legal and project teams are on track with these crucial regulatory changes – before it’s too late.

With over a decade of experience integrating technology to drive cost efficiency and project delivery, Cognia Law is well-equipped to support you through every step of the JIBAR transition.

Visit our regulatory reform platform Reg Reform Pro to learn more.

Stay tuned for our next article in this series, where we will cover Phase 3: Negotiation, Repapering, and Execution.

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