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ARTICLE · 18 MAY 2020

Arrc Announces Its 2020 Objectives For Facilitating The Transition Away From Usd Libor

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On April 17, 2020, the Alternative Reference Rates Committee (ARRC) unveiled its 2020 objectives for facilitating the industry's transition away from U.S. dollar (USD) LIBOR to the Secured Overnight Financing Rate (SOFR).

United StatesFinance and Banking
Donna Parisi
Donna Parisi
Geoffrey Goldman
Geoffrey Goldman
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On April 17, 2020, the Alternative Reference Rates Committee (ARRC) unveiled its 2020 objectives for facilitating the industry's transition away from U.S. dollar (USD) LIBOR to the Secured Overnight Financing Rate (SOFR).1 These goals and projected timelines build on the ARRC's previous transitioning work and aim to account for both the impact of COVID-19 on financial markets and the expectation that LIBOR still will be discontinued at the end of 2021.

Background

The ARRC is the Federal Reserve's LIBOR-transition working group comprised of private-sector entities and industry regulators. Among other things, the ARRC has (1) recommended SOFR plus a spread adjustment to replace USD LIBOR and to operate as a fallback; (2) released a transition plan2 promoting the use of SOFR voluntarily; and (3) conducted numerous market-wide consultations to determine how best to implement SOFR-based fallback language into existing ("legacy") LIBOR-based financial contracts. The

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