On Friday, March 5, 2021, the US Alternative Reference Rates Committee (ARRC), the group of private sector and government agencies working on alternatives to the end of the use of LIBOR, issued a press release commending the issuances by ICE Benchmark Administration (IBA), the LIBOR administrator, and the UK Financial Conduct Authority (FCA), confirming that the publication of LIBOR on a representative basis will cease immediately following the December 31, 2021, for the one-week and two-month USD LIBOR settings, and immediately after the June 30, 2023 USD LIBOR settings for the remainder.
The ARRC press release also referenced statements applauding the IBA/FCA announcement by the Federal Reserve Board, Federal Reserve Bank of New York, and the Commodity Futures Trading Commission.
Please see our post by our UK and Singapore colleagues on this announcement.
The IBA originally had proposed these cessation dates in a December 2020 consultation. The March 5 announcement was a confirmation by the IBA that the feedback from the consultation confirmed that the December 31, 2021, and June 30, 2023 dates were the correct way to proceed. In December, we had posted an item on the issuance of the consultation and the US bank regulatory agencies reaction to it. The post also referenced the agencies’ statements on the issue, including a reminder that banks now should be including alternative reference rates or fallback language in new contracts, as opposed to continuing to reference LIBOR. While there is no regulation that prohibits banks from referencing LIBOR in new contracts, should the banks continue to reference LIBOR in new contracts, and not provide alternative rates or fallback language in those new contracts, particularly after June 30 of this year, they risk receiving severe criticism from bank regulators for failure to prepare for this important transition.
Norton Rose Fulbright has assembled a group of its attorneys from around the globe to stay on top of these issues and assist clients in the transition to new reference rates. More information can be found here.