ARRC Requests Guidance From U.S. Regulators On Existing Derivatives Contracts

The Alternative Reference Rates Committee ("ARRC") requested guidance regulatory treatment of (i) existing derivatives contracts that have been altered to include new fallbacks or reference alternative risk-free rate benchmarks ("RFRs"), and (ii) new derivatives contracts referencing RFRs. The ARRC submitted the request to eight U.S. regulators (the CFTC, SEC, FDIC, U.S. Treasury Department, OCC, Federal Reserve Board, Farm Credit Administration and Federal Housing Finance Agency).

In a letter, the ARRC highlighted ongoing industry efforts to transition to "risk free alternatives" from LIBOR and other interbank offered rates. It noted that facilitating an effective transition will require significant work and regulatory clarity and guidance.