On Jan. 28, 2021, the Alternative Reference Rates Committee (“ARRC”) issued a press release highlighting an editorial authored by Tom Wipf, the ARRC’s Chairman. In his piece, Chairman Wipf highlighted that, in recent announcements by U.S. supervisors, banks have been urged to stop new LIBOR issuances as soon as practicable because of “safety and soundness risks,” and that this is a signal to market participants to immediately stop issuing USD LIBOR-based instruments and start writing the Secured Overnight Financing Rate (“SOFR”) into new contracts. Chairman Wipf also stated that, for legacy LIBOR contracts, market participants should take proactive action where possible. For example, by adopting the International Swaps and Derivatives Association Inc.’s “IBOR Fallbacks Protocol” for derivatives, or the ARRC’s recommended fallback language for agreements.
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