Comment Deadline Set for FRB Proposal to Implement the Adjustable Interest Rate Act

The Federal Reserve Board set an August 29, 2022 deadline for comments on proposed rules to establish benchmark replacements for contracts that reference certain tenors of U.S. dollar LIBOR. The proposed rules implement the Adjustable Interest Rate ("LIBOR") Act. The notice was published in the Federal Register.

As previously covered, the proposed rules set rates as the "Board-selected Benchmark Replacements" to replace the benchmark rate in U.S. dollar LIBOR-linked contracts, including:

• SOFR for derivatives contracts;
• "simple" SOFR for overnight LIBOR and CME Term SOFR for other tenors of cash transactions involving consumer loans;
• "simple" SOFR for overnight LIBOR and 30-day Average SOFR for other tenors for cash transactions involving GSE contracts; and
• "simple" SOFR for overnight LIBOR and CME Term SOFR for other tenors for all cash transactions other than consumer loans and GSE contracts.

The proposal follows from the LIBOR Act in setting forth circumstances in which a board-selected replacement will generally apply for certain contracts.