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Unit 4: Transaction Manager – Basic Customizing for all Products

transaction, the contract must be released, settled, counter confirmation assigned, and the
cash flows released for posting. Only then the transaction cash flows can be posted. For fixed-
interest bonds, the investment and accrued interest amount are posted.
To enter account determination, use the customizing path: Financial Supply Chain
Management →Treasury and Risk Management →Transaction Manager →General Settings →
Accounting →Link to Other Accounting Components →Define Account Determination.

LESSON SUMMARY
You should now be able to:
● Understand aspects of account determination

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Unit 4
Lesson 10
Replacing LIBOR

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Learn about Benchmark Reform
● Know what changes on SAP with the benchmark replacement
● Know where to go to get more information

Learning about Benchmark Reform

Figure 251: Benchmark Reform Details

LIBOR, which is short for the London Interbank Offered Rate, is the benchmark interest rate
used in bonds, loans, derivatives, intercompany loans, etc., worth over $350 trillion around
the world. It is being phased out starting at the end of 2021 due to its history of being
manipulated by banks. This is what we refer to as the "benchmark reform".
LIBOR will be replaced by a variety of Alternative Reference Rates (ARRs) or Risk-Free Rates
(RFRs) around the globe - generally by country. This slide shows an example of some of the
requirements included with the benchmark reform. These new rates behave differently from
LIBOR in some significant ways. For example, The Secured Overnight Financing Rate (SOFR)
is expected to be the preferred alternative reference rate for US dollar financial products after
2021. SOFR is based on transactions in the Treasury repurchase market, where banks and
investors borrow or loan Treasuries overnight. Similarly the ESTR reference rate will be used
for EUR financial products after 2021.
SAP customers must actively prepare for a one-time transition on SAP from LIBOR to one of
the alternative rates. In addition to modifying or renegotiating outstanding contracts with the
counterparties of the trades, this task involves preparing and updating the SAP software and
outstanding trades. Currently, conversion of existing instruments is not supported.

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