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ARTICLE · 15 MARCH 2021

LIBOR Transition Update: Financial Institutions Brace For Exam Scrutiny

A&O Shearman
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On March 9, 2021, the Federal Reserve Board published a Supervision and Regulation Letter (SR 21-7) (the "SR Letter") containing guidance for examiners in assessing supervised firms'...

United StatesFinance and Banking
Mark Chorazak
Mark Chorazak
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On March 9, 2021, the Federal Reserve Board published a Supervision and Regulation Letter (SR 21-7) (the "SR Letter") containing guidance for examiners in assessing supervised firms' LIBOR transition progress. Significantly, the SR Letter directs examiners to consider issuing supervisory findings and other supervisory actions for firms that are not prepared to stop using LIBOR by December 31, 2021.

The SR Letter follows the issuance of an Interagency Statement on LIBOR Transition on November 30, 2020, which noted that entering into new contracts that reference LIBOR after December 31, 2021 would create safety and soundness risks. The guidance also follows statements last week by the U.K. Financial Conduct Authority, the ICE Benchmark Administration Limited, the International Swaps and Derivatives Association (ISDA), and the Alternative Reference Rates Committee regarding the cessation of LIBOR.

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