CFTC Chair Encourages Firms to Be Proactive as LIBOR Cessation Approaches
CFTC Chair Rostin Behnam encouraged market participants to continue transition efforts in advance of the June 2023 cessation of USD LIBOR.
At an event sponsored by Bloomberg, Mr. Behnam highlighted actions taken by governmental authorities and market participants to facilitate the transition away from LIBOR and urged market participants to continue to act to facilitate the transition in advance of the June 30, 2023 cessation date for USD LIBOR. Mr. Behnam said that the transition away from LIBOR is nearly complete, but emphasized that a lot of work still remains to be done. He encouraged market participants to be proactive to help mitigate the risk of potential issues.
Commentary
Mr. Behnam's speech is largely descriptive, but his comments on Term SOFR are notable. He stressed that "[u]se of Term SOFR rates in derivatives and most other cash markets must be limited to avoid the types of problems created by LIBOR," and specifically highlighted concerns relating to a "rather large securitization" that referenced Term SOFR.