CFTC Market Risk Advisory Committee Considers LIBOR Transition

The CFTC Market Risk Advisory Committee ("MRAC") considered issues related to LIBOR reform initiatives and efforts to develop the Secured Overnight Financing Rate ("SOFR") as a viable alternative rate.

At the meeting, panels composed of regulators and industry members:

• reviewed LIBOR reform efforts, including actions taken by the Financial Stability Oversight Council and the Alternative Reference Rates Committee ("ARRC");
• discussed reference rate improvements, including efforts to develop SOFR and SOFR derivatives; and
• discussed the effect that reform efforts may have on derivatives contracts.

CFTC Chair J. Christopher Giancarlo asserted that the "discontinuation of LIBOR is not a possibility. It is a certainty." As a result, he argued, regulators must "anticipate it . . . accommodate it and . . . adapt to it." Mr. Giancarlo emphasized that active preparation and coordination among regulatory agencies is essential to ensure a successful transition away