I guess almost anyone switched to OIS discounting for their collateralized swap books as of now. But are there banks, maybe smaller ones, insurance companies, other financial institutions, that are still applying Libor discounting ? Maybe only in ceratain areas, like accounting ?Just curious to get a broader view on the current status.

Yes, very much so. Many banks, even big ones, still use Libor discounting in some areas, including pricing in some less developed markets

sv79 has hit the nail on the head. I believe that some buy-side players have looked at the cost of implementing OIS and decided that for the difference it makes versus the volume/exposure they have it is not worth doing. Other firms have a plethora of different systems, and OIS has been implemented in some of those at a trade level. Some firms are implementing a "top-of-the-house" adjustment to correct their B/S to OIS prices, but the day-to-day is still on LIBOR. There is then the issue of a swaps trader suddenly becoming exposed to a whole set of risks that they are not used to seeing : and this causes an operating model challenge.Of course the LIBOR benchmark itself is suspect due to the fact that there is virtually no trading in this area. ICE are looking at changing the way the index is formulated, however that is a HUGE undertaking.

If you are talking about a large place, major currencies, IRD, then (almost) everyone is getting basic CSA-driven discounting right for pricing, and many people are routinely managing to price in collateral choice value and carry everything through in their decomposition to driving risk in their hedging and VaR etc.And of those who aren't all the way there, (almost) everyone knows how to get there and is working at it, although rmax is definitely right that there's operational/organisation change involved as well as such the quant bits.Once you move outside that space in any of those respects it gets more spotty.For institutions, some are still on LIBOR. Part of the problem is regulatory constraints around how insurance/pension type firms can account for things.For currencies, smaller currencies can throw up issues that the larger ones to not: LCH member currencies with no term OIS market, or separate on/offshore markets. That, coupled with the smaller exposures, makes them tend to lag in adoption.For business areas, Equities/Credit Derivs/FX will tend to pick up CSA-driven discounting after IRD for obvious reasons. The length of the gap varies from place to place. I have heard some horror stories.

QuoteOriginally posted by: arkestraFor institutions, some are still on LIBOR. Part of the problem is regulatory constraints around how insurance/pension type firms can account for things.are you saying that regulation requires Libor discounting for these and forbid OIS ?

Quoteare you saying that regulation requires Libor discounting for these and forbid OIS ?I do agree it sounds odd, but that's my understanding from a couple of brief conversations with those working there.You'd have to ask someone working in that field for the details.There are all kinds of weird legal hangovers from agreements drawn up before the new style of discounting.