ARRC Provides Implementation Checklist for Transition from LIBOR to SOFR

The Alternative Reference Rates Committee (the "ARRC"), a group convened by the Federal Reserve Board and Federal Reserve Bank of New York, provided a "detailed practical implementation checklist" to be used by buy-side firms transitioning from LIBOR to a Secured Financial Overnight Financing Rate ("SOFR"). Specifically, the ARRC recommends:

• establishing a robust governance framework to oversee the implementation of a firm's "enterprise-wide" LIBOR transition program;

• developing an enterprise-wide program that will mitigate risks associated with the transition and be designed specifically to meet each firm's needs;

• implementing an enterprise-wide strategy that will increase levels of education for impacted stakeholders;

• identifying and validating LIBOR-linked assets and exposures;

• understanding and assessing the impacts of transitioning from LIBOR, in addition to implementing fallback provisions;

• creating a strategy for redesigning or transitioning the current portfolio of LIBOR products, with consideration of the new usage of products based on SOFR;

• maintaining procedural and oversight routines to manage both financial and non-financial routines;

• addressing the implications resulting from the LIBOR transition with operational and technology readiness plans; and

• determining (i) accounting and reporting considerations and (ii) tax and regulatory considerations.