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TD Securities
Libor: An Inconvenient Truth

In recent months the future of Libor has been the subject of intense debate. While the topic has been intermittently discussed since the financial crisis, when it became clear that Libor fixings were not in line with bank funding conditions, the debate has sharply intensified in recent months. July remarks by Andrew Bailey of the Financial Conduct Authority (FCA) — the regulator of Libor — jolted the market and spurred many participants into taking the transition away from Libor more seriously.

Libor is a public good…until 2021
The FCA has regulated Libor since 2013 and has made significant improvements to the rate through its administrator, ICE Benchmark Administration (IBA). IBA and the twenty panel banks that submit contributions have introduced changes in the quality of governance around submissions, aiming to anchor submissions to transactions. However the underlying market that Libor seeks to measure — the market for unsecured wholesale term lending to banks — is no longer active. According to ICE, fewer than 30% of USD 3m Libor submissions are based on transactions.
Meanwhile, many banks reportedly wished to withdraw from being a Libor submitter. Such a move would severely weaken the representativeness and robustness of the rate, potentially creating a domino effect that leads more banks to leave the panel. UK and European legislation only gives regulators limited power to compel banks to continue submitting to Libor. In the case of the European Benchmark Regulation, the “compelling power” is only one to two years. However, FCA’s Bailey and Fed’s Powell have suggested that banks have volunteered to stay on as submitters until 2021, giving the industry time to transition to a new benchmark.

What happens after 2021?
Part of the reason that the 2021 deadline was set is that the FCA believes work on a transition is unlikely to begin in earnest if market participants assume that Libor will last indefinitely. The fate of Libor after the end of 2021 is up to the IBA and the panel banks. They could continue to produce the rate, but because the FCA cannot oblige panel banks to stay, the robustness of Libor could deteriorate.
Global regulators have meanwhile blessed a number of alternative benchmark rates. All of the rates chosen globally to replace Libor have the benefit of being anchored in much more active markets than term Libor, involving little expert judgement. Additionally, in order to resolve the issue of which members to put on a rate-setting panel, these alternative rates use data from all relevant market participants.

SOFR So Good
The NY Fed is expected to release the SOFR rate in Q2 2018 along with two other rates based upon trade-level data from various segments of the repo market. Fed Chair Nominee Powell blessed SOFR in a recent conference, noting that, “The alternative reference rate needs to be able to stand the weight of having trillions of dollars written on it, and the ARRC has definitely met this standard in choosing SOFR.” The transactions underlying SOFR total nearly $700bn/day — much larger than the volumes in overnight unsecured markets and even larger than Treasury bill trading volumes. Powell’s endorsement of SOFR is the first time that a US regulator has been so explicit about the move away from the current Libor benchmark. Note that an estimated $160tn of contracts are linked to Libor and 90% of the that is linked to USD Libor. In August the Fed Board invited public comment about the plan for producing these rates.

These rates will improve transparency into the repo market by increasing the amount and quality of information available about the market for overnight Treasury repo. The rates will be volatile by construction, but given how many transactions these rates incorporate, it will be difficult for any one market participant to influence the rate. The tri-party rate will effectively be the offer side of the market and will be less volatile.

How is SOFR calculated?
The NY Fed proposes using a volume-weighted median as the central tendency measure for SOFR, which would be consistent with the methodology used for the Effective Federal Funds Rate (EFFR) and Overnight Bank Funding Rate (OBFR). In the event of an even number of transactions in the data set, the median would be considered to be the higher of the two numbers (i.e., it would be rounded up). There is a case to be made for a volume-weighted average (geometric or arithmetic mean) rather than a median since SOFR might have a bimodal distribution. One peak would represent relatively low tri-party rates and a second peak would reflect GCF and DVP GC transactions. The median of a bimodal distribution could be more volatile from day-to-day than a traditional volume-weighted arithmetic average if the valley between the two peaks is flat and low. Depending on the shape of the distribution, small changes in the relative volumes of the two peaks can result in significant shifts in the median rate.

All repo transactions that are initiated by a collateral borrower that requires a specific issue tend to trade below the GC repo rate. However, some form of filtering needs to be applied to the SOFR rate to remove transactions that are “special”. Simply removing transactions based on recent issues keeps other issues that may be trading special in the calculation. It would also exclude those on-the-run issues that may not be trading special. It is difficult to know the exact level of filtering required.

How does SOFR compare with other rates?
There are a few key features that distinguish SOFR from other rates:
Overnight: SOFR and EFFR are overnight rates, while Libor has term rates.

Secured: SOFR is a secured rate and therefore incorporates the cost of balance sheet while EFFR and Libor are unsecured.

Risk free: SOFR and EFFR are measures of the risk free rate, while Libor has some credit component since it measures bank funding costs.

Arrears: SOFR and EFFR are rates where payment occurs in arrears versus Libor, where you can settle in advance.

The similarity between SOFR and EFFR makes it useful to compare the new rate to EFFR. The Fed has released SOFR data going back to August 2014 and since then, the 3-month geometric means of SOFR and EFFR have generally tracked closely. Over this period SOFR has averaged about 4bp below EFFR, which is sensible since SOFR is a secured rate and may incorporate some special transactions. The rate is more volatile during month- and quarter-ends, where balance sheet pressures tend to move SOFR above EFFR.

A brave new world with SOFR

Below we discuss the ARRC transition plan. However, we believe that ultimately it is the liquidity in SOFR-linked contracts that will drive the pace of transition. Since SOFR is an overnight rate, many market participants may need to build out the infrastructure of compounding a daily rate. SOFR-based swaps are also likely to be uncleared initially, while Libor-linked swaps are cleared. Regulators may need to incentivize investors to switch to SOFR for new swaps entered into before 2021.

Another key issue as the market transitions to SOFR is the inclusion of the new rate in the FASB hedge accounting standards. Current standards include the SIFMA Municipal Swap Rate, the US Treasury Rate, the Libor Swap Rate, and the Fed Funds Effective Swap Rate. Inclusion of the SOFR will help build liquidity in contracts referencing SOFR and ease the transition for many derivative counterparties.
The paced transition plan:

  •      H2 2018: Infrastructure for futures and/or OIS trading in the new rate is put in place.
  • By end 2018: Trading begins in futures and/or bilateral uncleared OIS that reference SOFR.
  • Q1 2019: Trading begins in cleared OIS that reference SOFR in the current (EFFR) PAI and discounting environment.
  • Q1 2020: CCPs begin allowing market participants a choice between clearing new or modified swap contracts (swaps paying floating legs benchmarked to EFFR, Libor, and SOFR) into the current PAI/discounting environment or one that uses SOFR for PAI and discounting.
  • Q2 2021: CCPs no longer accept new swap contracts for clearing with EFFR as PAI and discounting except for the purpose of closing out or reducing outstanding risk in legacy contracts that use EFFR as PAI and the discount rate. Existing contracts using EFFR as PAI and the discount rate continue to exist in the same pool, but would roll off over time as they mature or are closed out.
  • By end 2021: Creation of a term reference rate based on SOFR-derivatives markets once liquidity has developed sufficiently to produce a robust rate.

The legacy problem
The FSB’s Market Participants Group (MPG) estimates the notional volume of outstanding financial products referencing USD Libor at more than $160tn. USD-denominated interest rate swaps represent approximately 90% of this outstanding gross notional volume. In terms of other USD-denominated products, the MPG estimates that USD Libor is used as the reference rate in 97% of syndicated loans, 84% of floating/variable rate notes and 71% of collateralized loan obligations. A transition for all of these contracts and products will be a complicated task to say the least. The key question for the transition is whether the industry needs to:

  •  Amend contracts to reference an alternative rate, or
  •  Amend the definition of Libor through the fallback protocol to replace the current methodology with alternative reference rates. This could be done by developing a spread, which could be added to the base of the risk free rates.

By March 2018 the International Swaps and Derivatives Association (ISDA) plans to draft a report that includes a survey for the users of Libor (derivatives, securities, loans, MBS), identifying issues with the transition in existing and new contracts, and recommendations.

ISDA Triggers: What determines that Libor doesn’t exist?
The first question is what determines that an investor has to find a replacement for Libor in an existing contract. If all panel banks stop submitting Libor, it would be an obvious trigger. But it becomes more difficult if a few banks drop from the panel. What determines that the panel may have “degraded” is a very subjective issue. Currently, the ISDA trigger is a public statement by the supervisor (in this case the FCA) about an insolvency of the relevant administrator (in this case ICE) or that Libor has been permanently or indefinitely discontinued or that it may no longer be used. Another ISDA trigger is a public statement by the administrator that it will cease publishing Libor.

ISDA fallback: What should replace Libor in a contract?
Current ISDA fallback protocol is meant for a temporary disruption for Libor. Many contracts allow the counterparty to call up 3 banks in London and obtain an average quote. However, in a situation when banks have stopped submitted Libor, this does not seem like a feasible alternative. Thus more work needs to be done on a permanent solution for a time when Libor may not exist. ISDA has already confirmed it is willing to develop a protocol that would allow market participants to update existing documents to insert a fallback rate should Libor cease to be published after 2021, or possibly sooner in the case of Euribor.
Under the ARRC transition plan, counterparties to Libor-linked swaps would amend their documentation to reference an alternative rate well before Libor might cease. Moving from Libor to SOFR would create a valuation change given that SOFR is lower than the Libor rate. The aim is to find the amount of compensation that each side will be willing to pay and receive to make the switch. That amount could be thought of as a spread which could be added to SOFR, which would replace Libor in an existing spread.

How do you compute and administer the spread?
There are two approaches are currently being discussed to compute the spread: a historical approach and an auction approach. A historical approach would freeze the Libor-SOFR basis on the day the benchmark is ceased while the latter would involve determining the Libor-SOFR basis each day via an auction process.

The cash problem
So far we have discussed the issues for the transition away from Libor for derivatives. However, there are many cash products that are linked to Libor, with a many of these products possessing terms past 2021. The ARRC has expanded its work to incorporate the cash transition plan, resulting in discussions about creating a term reference rate. That term reference rate would have to be built by first developing futures and OIS markets that reference SOFR. It will likely not be as robust as SOFR itself, and so derivatives transactions will almost certainly need to be based on the overnight rate. However, a term reference rate could conceivably be used in some loan or other contracts that currently reference Libor.
Below we discuss some of the current fallback issues across different products. We would expect new products that mature beyond 2021 to have a more robust fallback as a world without Libor looks much more likely now.

Current fallback language in Libor-linked cash products
 Mortgages and other consumer products: Typically the contract language in mortgages gives the noteholder the ultimate authority to name a successor rate if Libor was permanently discontinued. Other consumer loans may be more varied, but generally seem to have similar flexibility.

  • Floating rate notes: There are an estimated $1.5tn in outstanding Floating Rate Notes referencing USD Libor. However, 84% of these FRNs will mature by the end of 2021, and 92% by the end of 2023. Typical contract language would direct the calculation agent to first poll a sample of banks (similar to the ISDA fallback language) and then convert to fixed-rate at the last published value of Libor if quotes are not received. It would typically require unanimous consent of the noteholders to adjust these terms.
  • Securitizations: Approximately $1.8tn in outstanding securitizations reference USD Libor. Agency MBS allow Fannie Mae and Freddie Mac to name a successor rate if Libor was permanently discontinued, but typical contract language in other securitizations would require a poll of banks and then convert to fixed-rate at the last published value of Libor if quotes are not received. CLOs are typically called after an initial 1-2yr period, at which point fallback language could be amended.
  • Corporate Loans: Flow of Funds data estimate the level of nonfinancial corporate loans at $2.7tn (does not include committed but undrawn lines). A large share — $2.1tn — are syndicated loans (according to SNC data). Roughly 85% percent are floating rate, and a large share of those appear to reference Libor. The typical contract language appears to name the Prime Rate or the Effective Fed Funds Rate plus a spread as the fallback if Libor was discontinued. Note that bilateral loans can be renegotiated by the borrower and lender to amend this, while syndicated loans currently tend to require unanimous lender consent to amend these terms. However, syndicated loans are amended fairly frequently, so it is very likely that most or all of the outstanding stock of loans would be amended before the end of 2021. We expect that lenders will make sure that new and existing loan documents make sense in a world without Libor. Where possible, lenders and borrowers may look to adjust their credit agreement voting provisions so that any change to the rate benchmark will not require a 100% vote. In syndicated loan documentation, borrowers may want the selection of a replacement rate to require the approval of a majority of lenders, rather than requiring unanimous approval.
    Priya Misra, Gennadiy Goldberg

President’s Letter

Dear BABCPHL Members and Friends,

Happy New Year! I hope 2018 is off to a great start. I am pleased to report the BABCPHL closed the last quarter of the calendar year with educational forums featuring leading business executives who discussed timely topics such as cybersecurity and Brexit. In December we were joined by Mayor Kenney in welcoming the new Consul-General, Antony Phillipson to Philadelphia during our signature annual holiday luncheon.

During the coming weeks and months we are executing more than a half dozen programs related to pressing global business matters; young tech entrepreneurs; and UK cultural events throughout our region. While the majority of our programs are business oriented, we offer British culture and entertainment related activities as well. All BABCPHL events are valuable opportunities to meet members, network across sectors, and showcase your business or service offerings.

It is our job to promote the trade and investment relationship between the UK and the Greater Philadelphia region. Our Chapter’s jurisdiction includes Southeastern Pennsylvania, Southern New Jersey, and the State of Delaware. Within this geography we are honored to work closely and to collaborate with regional and UK government officials, and other international institutions.

As you read through this newsletter you will find a recap of our recent past activities and upcoming events in which our members may participate, as well as feature articles published by or about our members. We look forward to seeing and hearing from you often this calendar year.

Sincerely,

Michael J. Pedrick
President, British American Business Council of Greater Philadelphia


New Jersey Networking Event & Dinner

REGISTER HERE

Attend our annual dinner and experience traditional British pub food and specialty beer. The evening will provide valuable networking opportunities and excellent giveaways.

Date: Thursday, March 15, 2018

Time: 6:00pm – 8:00pm

Location: The British Chip Shop
146 Kings Highway East
Haddonfield, NJ 08033

 

Sponsors


The Future of UK-US Trade – Updated Position October 2017

We support efforts that strengthen the vital UK-US economic relationship

The UK-US economic relationship is one of the most comprehensive and successful in the world. It drives innovation, jobs and growth in both countries. We welcome efforts by UK and US Governments to strengthen that relationship. Having been a key promoter of transatlantic economic integration in the past; we will support initiatives that help to foster this vital relationship in the future.

We welcome the creation of the UK-US Working Group on Trade and Investment and the exploration of a potential future UK-US Free Trade Agreement

We welcome the creation of the UK-US Working Group on Trade and Investment (WGTI) and the sustained momentum it has received since it was first announced. We stand ready to provide a business stakeholder engagement platform into the dialogue, so government can hear directly the views of businesses in different sectors that trade and investment across the Atlantic every day on UK-US market access issues and the scope of a future US-UK Free Trade Agreement (FTA).

There is much scope to bring the UK-US economies closer together ahead of an FTA

There is much scope to bring the UK-US economies closer together ahead of a FTA. The ‘Moving Forward’ Paper published in April 2017 by BritishAmerican Business, which includes the London and New York Chapters of the network, outlined ten areas that transatlantic businesses see as a starting point for further UK-US economic collaboration, which can be tackled ahead of FTA talks and which can help set the objectives for a future US-UK FTA. We welcome the US and UK Governments efforts to work on those and congratulate both Governments to the recent positive announcement of a US-UK collaboration agreement in science.

The discussion on a future UK-US FTA must be held in context of ongoing Brexit talks and with view to create a strong and integrated transatlantic economy

We strongly advocate for the UK-US FTA discussion to take place in the context of the Brexit talks and the aim to create and sustain a strong transatlantic economy; and with that the ongoing economic integration of the US and the EU. Our members value the transatlantic relationship as a source of innovation and growth. A future US-UK FTA must therefore be part of a triangular thinking that ensures that the UK, EU and the US are together part of an integrated transatlantic economy.

October 2017


Brexit Updated Position – October 2017

The transatlantic business community remains committed to a strong UK that provides the best possible access to the EU

In a survey conducted by BritishAmerican Busienss, which incorporates the BABC chapters in London and New York, pre-referendum, 95% of transatlantic businesses who responded wished for the UK to remain part of the EU. It is with that mandate that we advocate for a for a negotiation outcome that best serves both the UK and the EU economies, its citizens and our members; many who operate daily across borders. We are committed to a strong UK that provides the best possible access to the EU.

We welcome proactive UK Government stakeholder engagement

We welcome the increase the proactive engagement UK Government shows at a senior level and opportunities to present our members’ concerns and priorities. As negotiations continue, it is important to keep lines of communications open and demonstrate that Government is taking business views into account.

We have serious concern about a lack of progress on critical business issues

Although the risk of a ‘cliff-edge’ scenario has decreased, and positive developments made on a transition period, we remain concerned about the lack of progress made in negotiations and continued lack of solutions in difficult areas that matter to business. As negotiations approach the March 2019 deadline, the largest areas of concern remain the decision over a transition period and its length, and the overall lack of clarity about the kind of economic integration the UK wants to build with the EU post-Brexit.

Brexit is already impacting investment decisions

The UK’s decision to leave the EU and the uncertainty around its future relationship with the EU has already used up substantial human and economic capital for businesses trying to mitigate its effects. The continuing uncertainty over the UK’s future attractiveness as a destination for business is already impacting our members decisions to invest in UK operations. The prospect of additional financial costs, administrative burdens, increase in supply chain times and restrictions on accessing foreign talent is causing companies to either move or hold back investment.

Key concerns for transatlantic businesses
Key concerns for businesses in the transatlantic community in the Brexit negotiations include:

• The economic impact of a customs border between the UK and the EU

• The economic impact of a growing regulatory divergence between the UK and the EU.

• The economic impact of the reduced ability to attract talent, short-term and long-term.

• The economic impact of potential divergence from the European General Data Protection Regulation (GDPR) and the UK an unclear participation of the UK in transatlantic data flows frameworks (‘Privacy Shield’)

October 2017


The Future of Business Immigration

On October 27th a group from the German American Chamber of Commerce, French American Chamber of Commerce and British American Business Council gathered for a Lunch & Learn, hosted by Green and Spiegel.  Immigration attorneys, Jonathan Grode and Ralf Wiedemann’s topic, “The Future of Business Immigration”, was extremely topical and informative.  We learned that the last large immigration reform happened in 1986 and while the policy of immigration hasn’t changed too much, our perception and the attitude of those issuing the visas has.  Jonathan also pointed out that there is a strong migration of employees leaving the State Department.  This “brain drain” is negatively affecting all aspects of the governmental arm, as those with years of experience and knowledge are no longer employed and the Department of State is desperately trying to fill the vacancies.  While one would think regardless of who is employed, they have certain laws to follow – which is true to an extent.  Congress implemented the Immigration & Nationality Act of 1965, but it is the State Department’s responsibility to interpret the Act and implement regulations.  Those interpretations can change as those in power at the State Department do.  This is what is creating the uncertain environment that is felt within the world of immigration today.

Another point we touched upon, was the Executive Branch’s decision to rescind the Deferred Action for Childhood Arrivals (DACA) from a business standpoint.  We were left with the question – how will the lay-off of 800,000 DACA workers in March 2018 affect the economy?

It was a fascinating conversation and lively discussion by the attendees who asked many questions and voiced concerns with this ever-evolving topic.  As the immigration environment continues to change, we look forward to Lunch & Learn again with Green and Spiegel.


Allied Integrated Marketing – Goodbye Christopher Robin Screening

The BABCPHL and Allied Integrated Marketing welcomes you to join us for a screening of Fox Searchlight’s new film, GOODBYE CHRISTOPHER ROBIN. The screening will be held on Monday, October 16th at 7:30 PM at Ritz East. We will provide 50 tickets on a first come, first serve basis.

REGISTER HERE

Opens in Philadelphia October 20th

Cast: Domhnall Gleeson, Margot Robbie, Kelly Macdonald, Will Tilston

Directed by: Simon Curtis

Written by: Frank Cottrell Boyce, Simon Vaughan

Produced by: Damian Jones, Steve Christian  

GOODBYE CHRISTOPHER ROBIN gives a rare glimpse into the relationship between beloved children’s author A. A. Milne (Domhnall Gleeson) and his son Christopher Robin (Will TIlston), whose toys inspired the magical world of Winnie the Pooh. Along with his mother Daphne (Margot Robbie), and his nanny Olive (Kelly Macdonald), Christopher Robin and his family are swept up in the international success of the books; the enchanting tales bringing hope and comfort to England after the First World War. But with the eyes of the world on Christopher Robin, what will the cost be to the family?

 

 

 


Club Level Feature: Ernst & Young

EY collaborates with Microsoft on a new analytics solution to help organizations enhance workforce productivity and well-being

London, 12 July 2017

EY announced this summer that it is collaborating with Microsoft to provide a new analytics solution called Workplace Insights, which can help organizations enhance their productivity and the well-being of their work forces by uncovering data patterns in digital communication and employee collaboration in today’s complex, digitally-driven business environment.

Workplace Insights combines the Microsoft Workplace Analytics platform with EY services consulting and data analytics experience to help organizations reach informed business decisions that can improve performance. The platform analyzes an organization’s existing communication and collaboration patterns – such as email and calendar metadata – and incorporates data from other enterprise systems to show how teams spend their time, collaborate and engage, both internally and externally, such as with suppliers or clients. EY interprets the outputs to help develop actionable insights and recommendations that organizations can use to support the execution of their strategic and operational priorities. The capability can be applied across business scenarios that include organizational transformation, mergers and acquisitions and real estate planning. Workplace Insights helps organizations use data to make informed decisions in these example areas:

  • Organizational transformations: Helps targeted and efficient change management and transformation efforts by measuring and monitoring the real-time effectiveness of change programs and engagement.
  • Mergers and acquisitions: Supports integration, benefits realization and retention of critical talent by identifying degree of group collaboration and communication patterns across formerly disparate teams or organizations. This analysis can be used as forward-looking indicators of success or flag potential risks.
  • Organization design: Helps to provide organizations with a quantitative look at collaboration and communication habits, new activity patterns and make more informed decisions around changes in roles and responsibilities based on these new data sets.
  • Workspace and real estate planning: Allows planners to improve productivity and enhance employee engagement and collaboration by understanding where, when and how groups work. Work location and commute time information can be loaded into the platform, which supports EY in providing insights around capacity, design transformations and broader real estate planning activities.

Mike Bertolino, EY Global People Advisory Services (PAS) leader, says:

“In today’s fast-paced and highly competitive environment, employers continue to face increasing operational pressures, especially as the global workforce evolves. This collaboration with Microsoft combines data science with a focus on the value that people bring to their work. Workplace Insights helps companies to better understand the effectiveness of their people, so they can identify opportunities for change and help support their people to be the most productive and collaborative as possible.”

Ryan Fuller, General Manager, Microsoft MyAnalytics & Workplace Analytics, Microsoft, says:

“Working with EY to leverage the organization’s in-depth experience in workforce transformation and change management across multiple industries, we anticipate that we will increase our engagement with organizations around the world. In today’s disruptive and highly competitive environment, it is more important than ever that companies take full advantage of the data they have at their disposal and understand what drives value, so they can make better-informed decisions.”

Together, EY member firms and Microsoft deployed Workplace Insights to help a global professional services firm’s IT organization in redesigning process and structure to increase customer centricity and decrease cost. The company leveraged the data to improve collaboration between groups and identify optimal reporting relationships and organizational structures, which helped measurably improve product development, margin and speed-to-market.

Greg Cudahy, EY Global Lead, Technology, Media & Entertainment, and Telecommunications, says:

“Particularly for large transformations that can drive hundreds of millions of dollars in value, organizations need to be sure they can pinpoint their most collaborative and productive teams and facilities. Workplace Insights provides near-real-time, quantifiable feedback on what’s working and what is not, so organizations can quickly identify and leverage workforce opportunities. In addition, EY and Microsoft are committed to protecting clients’ and employees’ data privacy and confidentiality by aggregating and anonymizing data, while complying with increasingly varied and stringent data privacy regulations.”

The Workplace Insights solution is supported by more than 10,000 EY People Advisory Services practitioners globally. The solution can be integrated with the EY Organization Talent Hub (OTH), a tool built on the Microsoft Azure platform. OTH pulls an organization’s data into a secure environment, providing access to crucial statistics before and after the restructuring occurs. It offers the granularity necessary for planning the new organization design and selecting and retaining talent, while tracking workforce movements needed for day-to-day operations.


President’s Letter

Dear BABCPHL Members and Friends,

I am honored to officially communicate with you for the first time as President of the BABCPHL. While I have served in various Executive Committee roles and on the Board of Directors for more than a decade, I am pleased to assume this new leadership position.

BABCPHL closed the books on an excellent fiscal year at the end of June. Our second quarter century of operations and success in the region is well underway. But the key to that continuing success is making sure the BABCPHL is providing value to you, its members. We want to hear from you! Please tell us how we can best serve you and the interests of your company. Is there a pressing issue or topic related to UK-business you would like us to present? Are you a member and would like an opportunity to participate more fully? Are you are not currently a member and might like to join but don’t know the next steps? Contact us with questions or comments: www.babcphl.com

While the summer is often a quiet time, the BABCPHL was very productive. We launched our new logo, published our annual membership directory, hosted a few programs, and planned our new fiscal year activities. Upcoming BABCPHL events include seminars about pertinent subjects such as cybersecurity and Brexit, and of course, our signature holiday program. Read on to learn more.

I look forward to working with you to promote the trade and commercial relationship between the Greater Philadelphia region and the UK.
Sincerely,

Michael J. Pedrick
President, British American Business Council of Greater Philadelphia


Human Interest Feature

BABCPHL Transatlantic Network
By Caroline Willems, BABCPHL Coordinator
Fox School of Business, Temple University

Globalization has changed us into a company that searches the world, not just to sell or to source, but to find intellectual capital – the world’s best talents and greatest ideas.

– Jack Welsh

Have you ever heard the saying, “it takes a village?” Well it most certainly does. The British American Business Council of Greater Philadelphia (BABCPHL) is an exceptional platform to facilitate opportunities within and beyond Philadelphia. BABCPHL provides strategic connections to understand, de-risk, and execute business relationships on both sides of the Atlantic.  While the world is smaller than ever due to technology and other advancements used to more easily communicate, a myriad of entities are required to smoothly run a business or an organization, and the BABCPHL is no exception.  Did you know the BABCPHL is one of many British-American Business Council (BABC) Chapters throughout North America and the UK, governed by a cross-chapter board with a Secretariat provided by the Council’s London chapter, BritishAmerican Business (BAB)?  While the BABCPHL maintains its own Board of Directors and members based within its geography – Southeastern Pennsylvania, Southern New Jersey and the State of Delaware – the organization works closely with the overall BABC network.  BABCPHL also collaborates with the Department for International Trade (DIT), the economic development arm of the UK government.  We work closely with all of these groups to ensure seamless delivery of our mission.

BABC is the largest transatlantic business network with 22 Chapters, 18 BABC chapters in the US and four in the UK, located in major business centers. Canada is represented with an Ontario based chapter. These 22 groups include more than 2,000 businesses on both sides of the Atlantic Ocean.  While all BABC chapters are successful organizations on their own, the groups benefit from the work and role of its New York and London chapters, who together form the BAB. With a team of more than two dozen people and its transatlantic brand, BAB acts as a driver for the overall network, offering content, advocacy contacts, and exposure.

The UK’s Department for International Trade (DIT) is another invaluable resource to the BABCPHL. DIT’s mission is to “help UK business export their products and services to grow in the global marketplace.” DIT also helps US based companies looking to invest or grow their business in the UK. DIT has offices throughout the US, with offices in New York, Boston and Washington, DC on the east coast. DIT is a specialized government body with responsibility for negotiating international trade policy, supporting business, as well as delivering an outward-looking trade diplomacy strategy. To find out more about the services DIT offers US businesses, visit www.great.gov.uk.

The highest UK office here in the US is the British Embassy which is responsible for citizens of England, Scotland, and the Cayman Islands. The Embassy is located in Washington, DC. Located within the Embassy grounds is the residence of Sir Kim Darroch, the current British Ambassador to the US. Sir Darroch is the British chief spokesperson for one of the largest embassies in Washington, DC, with more than 210 diplomats and 250 staff members. The job of the British Embassy is to protect and aid UK citizens while they are residing in the US, and communicate diplomatic matters back to their native country. The British Embassy is responsible for the communication between the host government (US) and their own country’s government (UK).

There are 11 Consulates and UK Government offices situated in major cities across the US. Consulates have some of the same responsibilities of the Embassy. However, certain situations are required to be handled at the Embassy level. An Embassy is required for more pressing diplomatic issues and hosts an Ambassador. Consulates control diplomatic issues on a smaller scale, and host a Consul. Visas, marriage licenses, and British passports are situations where a UK citizen residing in the US would need to take a trip to one of the 11 Consulates.

The US is connected to the UK in many different ways. In order for business to run smoothly, it’s essential that organizations and government entities assist people and companies. When business is being conducted overseas, these entities become even more vital. BAB, DIT, the British Embassy, and the Consulates support international business between the US and the UK. These essential organizations aid in communication and overseas activities. The BABCPHL is pleased to collaborate with these important groups and thanks them for their support and partnership.

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The BABCPHL recognizes our Club Level Members:

  • Almac
  • American Airlines
  • Bartlett
  • Cigna
  • Deloitte
  • Drinker Biddle & Reath LLP
  • Duane Morris
  • EisnerAmper LLP
  • HSBC
  • Johnson, Kendall & Johnson, Inc.
  • McConnell Johnson Real Estate
  • Morgan Lewis
  • Law Firm of Pepper Hamilton
  • TD Bank
  • United Airlines
  • Virgin Atlantic