January 28, 2021

ARRC Chair Urges Actions to Transition from LIBOR

In an op-ed published by Bloomberg Law, the Alternative Reference Rates Committee ("ARRC") Chair Tom Wipf highlighted recent developments in the transition away from LIBOR. Mr. Wipf stressed the need for market participants to (i) "immediately" cease issuing USD LIBOR-based instruments and (ii) take "proactive measures" - such as adhering to the ISDA's IBOR Fallbacks Protocol or incorporating ARRC-recommended fallback language - for relevant contracts maturing after June 2023.

In regards to "tough" legacy contracts referencing USD LIBOR tenors that are not expected to cease publication until mid-2023 and have a maturation date after mid-2023, Mr. Wipf said that legislation would be the best solution for those contracts that do not have fallbacks and cannot be realistically amended. Mr. Wipf stated he considers such contracts to be "one of the transition's thorniest issues."

Further, Mr. Wipf expressed his support for federal legislation that is comparable to the provisions in New York State Governor Andrew Cuomo's 2022 fiscal year executive budget proposal (see part PP, at p. 233) intended to aid in the transition from LIBOR (see related coverage).

Note: Cadwalader serves as counsel to the ARRC and helped draft the proposed New York State legislation.

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