December 23, 2021

IBOR Transition Digest


Welcome to the final issue for 2021 of Mayer Brown’s IBOR Transition Digest. We will be back in 2022 to continue to keep you on top of IBOR transition developments globally.

The IBOR Transition Digest is a periodic compendium of global regulatory and market developments and insights on the complex issues confronting financial market participants as they plan to transition from LIBOR and its variants to replacement benchmark interest rates. As attention to IBOR transition accelerates and becomes more focused, it is critical to have access to comprehensive and timely resources about the market.

For additional resources and an introduction to our global cross-practice IBOR Transition Task Force, please visit Mayer Brown’s IBOR Transition portal.

Thought LeadershipNews and Developments | Events



Singing in the rain of LIBOR Transition
Eye on IBOR Transition blog, 17 December 2021
We are in the final days of LIBOR as we know it. Partner, Ash McDermott, discusses the recent advances in the export finance community toward LIBOR transition, with a specific focus on the question of whether export credit agencies should publish general “umbrella” guidance that would permit export loan documentation to transition to a recommended alternative rate without the need for export credit agency consent.

Adjustable Interest Rate (LIBOR) Act of 2021 Is Passed by the U.S. House of Representatives
Eye on IBOR Transition blog, 9 December 2021
On 8 December 2021, after a brief debate, the Adjustable Interest Rate (LIBOR) Act of 2021 was passed by the U.S. House of Representatives by a 415-9 vote.

LIBOR Transition: How Will the Pieces Come Together in Time?
American Bar Association Panel Discussion, 9 December 2021
A broad cross-section of industry experts, including Mayer Brown attorneys Paul Forrester and Matt Bisanz, discuss how they see the transition progressing through 2022 and what market participants need to know.

CFPB Issues Final Rule Addressing LIBOR Transition
Eye on IBOR Transition blog, 8 December 2021
On 7 December 2021, the Consumer Financial Protection Bureau issued a Final Rule to facilitate LIBOR transition, via amendments to Regulation Z, which implements the Truth in Lending Act. The amendments take effect on 1 April 2022, and compliance becomes mandatory on 1 October 2022.

FCA confirms rules for legacy use of synthetic LIBOR rates and no new use of US dollar LIBOR
Eye on IBOR Transition blog, 7 December 2021
The interest rate benchmark LIBOR is being wound down and the UK Financial Conduct Authority has announced how it will use its powers under the UK Benchmarks Regulation to aid the orderly wind-down of sterling- and yen-linked “tough legacy contracts.”

Refinitiv Spread-Adjusted Fallback Rates Become Production Benchmarks
Eye on IBOR Transition blog, 3 December 2021
Another piece of the puzzle fell into place for U.S. dollar LIBOR transition when, on 30 November 2021, Refinitiv, the ARRC-preferred publisher of spread-adjusted SOFR-based fallback rates, announced that its USD IBOR Institutional Cash Fallbacks are now available for use as production benchmarks.



United States – Syndicated and Bilateral Loans

Robust BSBY Fallback Language Is Unveiled
Loan Syndications & Trading Association, 13 December 2021
LSTA has published model fallback language provisions for use in a BSBY-linked credit agreement, which is to be complemented by a pending BSBY updated Methodology.

Draft Advisory – LIBOR Transition Checklist
Loan Syndications & Trading Association, 10 December 2021
Highlighting key considerations in the final weeks before LIBOR transition, including the need to prepare for non-LIBOR loan originations, best practices for contract amendments, and considerations with respect to notice requirements.

United States – Derivatives

“SOFR First” User Guide for Exchange-Traded Derivatives Transactions
Commodity Futures Trading Commission, 16 December 2021
Outlining best practices for market participants to consider with respect to transitioning new LIBOR-based exchange-traded derivatives activity to SOFR activity in the near term.

United States – General

Statements of Chair Gary Gensler at the Financial Stability Oversight Council Meeting
Securities and Exchange Commission, 17 December 2021
Key messages include (a) the SEC will use all of its tools to help market participants with LIBOR transition, (b) Chair Gensler supports changes to the Trust Indenture Act of 1939 to help facilitate the smooth transition from LIBOR, and (c) Chair Gensler does not believe that BSBY complies with IOSCO principles.

ARRC Releases LIBOR Transition Progress Report and Welcomes MRAC User Guide on Exchange-Traded Derivatives
Alternative Reference Rates Committee, 16 December 2021
“Market participants are clearly moving to SOFR across asset classes. The no new LIBOR deadline is fast-approaching, and … the ARRC similarly urges all market participants to replace use of LIBOR with SOFR for new contracts.”

Year-End Progress Report: The Transition from U.S. Dollar LIBOR
Alternative Reference Rates Committee, 16 December 2021
Overall, the ARRC observes that considerable progress has been made in the transition away from LIBOR to SOFR in cash and derivatives markets since the last progress report, and reiterates its belief that this progress will position markets well for the year ahead and establish SOFR as the market’s preferred LIBOR replacement rate.

ARRC Welcomes Passage of LIBOR Transition Bill by U.S. House of Representatives
Alternative Reference Rates Committee, 9 December 2021
The passage by the U.S. House of Representatives of H.R. 4616 Adjustable Interest Rate (LIBOR) Act of 2021 will minimize the risk of disruptive litigation and adverse economic impacts associated with LIBOR transition.

Statement of the Alternative Reference Rates Committee as the “Relevant Recommending Body” under State LIBOR Legislation with respect to 1-week and 2-month USD LIBOR tenors
Alternative Reference Rates Committee, 3 December 2021
Setting forth the selections and recommendations of the ARRC, as “Relevant Recommending Body,” with respect to the “Recommended Benchmark Replacement,” “Recommended Spread Adjustment” and “Benchmark Replacement Conforming Changes” that are applicable to Contracts, Securities and Instruments subject to legislation enacted in the States of New York and Alabama with respect to LIBOR discontinuance.

FAQs Regarding New York State LIBOR Legislation
Alternative Reference Rates Committee, 3 December 2021
Answering questions relating to provisions of the New York and Alabama state legislation that refer to recommendations made by the ARRC.

Refinitiv Launches USD IBOR Institutional Cash Fallbacks in Production to Facilitate Industry Transition from USD LIBOR
Refinitiv, 30 November 2021
Refinitiv announced that USD IBOR Institutional Cash Fallbacks are now production benchmarks, and it expects to launch USD IBOR Consumer Cash Fallbacks 1-week and 2-month settings on January 3, 2022.

Canada - General

CARR publishes White Paper on the recommended future of CDOR
Canadian Alternative Reference Rate Working Group, 16 December 2021
CARR has published a White Paper summarizing the findings and conclusions of its analysis of the current status of the Canadian Dollar Offered Rate (CDOR). Among other things, CARR recommended that the administrator of CDOR, Refinitiv Benchmark Services (UK) Limited, cease publication of all of CDOR’s remaining tenors after the end of June 2024, pursuant to a 2-stage approach.

United Kingdom – Derivatives

Policy Statement: Derivatives clearing obligation – introduction of contracts referencing TONA: Amendment to BTS 2015/2205
Bank of England, 3 December 2021
Setting forth the Bank of England’s final policy on the proposal to add Overnight Index Swaps (OIS) that reference TONA, with an original maturity between 7 days and 30 years, to the scope of contracts subject to the derivatives clearing obligation, effective as of 31 January 2022.

United Kingdom – General

Critical Benchmarks (References and Administrators’ Liability) Act 2021
UK Parliament, 15 December 2021
On 15 December, the Critical Benchmarks (References and Administrators’ Liability) Act received royal assent and became law, providing legal certainty as to how contractual references to a critical benchmark should be treated once the FCA provides for that benchmark to be published with a changed methodology.

FCA issues final messages on LIBOR before end-2021
Financial Conduct Authority, 10 December 2021
Summarizing the status of LIBOR transition as year end approaches.

The GBP LIBOR panel ceases at end-2021: Are you ready?
Working Group on Sterling Risk-Free Rates, 10 December 2021
The Sterling Working Group issued a statement encouraging use of SONIA linked contracts, where appropriate, for all new business and continued active transition away from LIBOR, and also highlighted recent regulatory guidance on ceasing new use of USD LIBOR by end-2021.

So long LIBOR – 3 weeks to go - speech by Director Edwin Schooling Latter at’s LIBOR telethon
Financial Conduct Authority, 8 December 2021
Summarizing transition progress to date, emphasizing the limitations of synthetic LIBOR, and noting in particular that “firms shouldn’t be relying on a synthetic solution or the same legacy use permissions for a synthetic US dollar LIBOR as we have given for sterling and yen.”

Article 23C Benchmarks Regulation – Draft Notice of Permitted Legacy Use by Supervised Entities
Financial Conduct Authority, 16 November 2021
Pursuant to Article 23C(2) of the BMR, the Authority permits all legacy use of 1-, 3-, and 6-month GBP and JPY LIBOR versions by supervised entities other than in Cleared Derivatives (whether directly or indirectly cleared).

Europe – Derivatives

Statement from the EUR Risk Free Rates Working Group
European Securities and Markets Authority, 9 December 2021
Supporting the RFR First Initiative and recommending the adoption of €STR for the EUR leg of EUR vs USD cross currency swaps in the EU interdealer market as of 13th December 2021.

Europe – General

Statement on Preparedness for the Cessation of EUR, GBP, CHF and JPY LIBORs and EONIA, and ceasing use of USD LIBOR in new contracts, at the end of 2021
Working Group on Euro Risk-Free Rates, 17 December 2021

Reminding market participants to be ready for the year-end deadlines and specifically to cease entering into new contracts that use EONIA and EUR, GBP, CHF, JPY and USD LIBORs as soon as practicable and in general terms by 31 December 2021.

Guidelines on methodology, oversight function and record keeping under the Benchmarks Regulation
European Securities and Markets Authority, 7 December 2021
Guidelines for supervisory practices and uniform application of Benchmark Regulation requirements.

Minutes of the 9 November 2021 meeting
National Working Group on Swiss Franc Reference Rates, 29 November 2021
Highlights include (a) the status of transition to SARON in the loan market, (b) the status of transition to SARON in the swaps market, and (c) the remaining key dates in, and technical details of, the transition of cleared LIBOR swap contracts by LCH and EUREX, including a revised EUREX contract naming convention for SARON Futures.

Asia & Pacific Rim – General

Joint Letter to Financial Institutions regarding Final Report on the Results of the Public Consultation on the Treatment of Tough Legacy Contracts in Japan
Bank of Japan and Financial Services Agency, 25 November 2021
Summarizing the results and implications of the 19 November Final Report, and noting that the Final Report results “will be referenced for supervision and monitoring, on the premise that they are regarded as a market standard.”

Global – Derivatives

ISDA Statement on CARR and RBSL Announcements on CDOR
International Swaps and Derivatives Association, 17 December 2021
Clarifying that the publication by the Canadian Alternative Reference Rate working group of a White Paper recommending that publication of all Canadian Dollar Offered Rate tenors cease after the end of June 2024, discussed above, does not constitute an index cessation event under the ISDA 2020 IBOR Fallbacks Supplement or the ISDA 2020 IBOR Fallbacks Protocol.

ISDA Publishes New Fallbacks for Additional IBORs
International Swaps and Derivatives Association, 16 December 2021
ISDA has published a new set of fallbacks for derivatives referenced to IBORs in India (MIFOR), Malaysia (KLIBOR), New Zealand (BKBM), Norway (NIBOR), the Philippines (PHIREF) and Sweden (STIBOR), and a supplement to the 2006 ISDA Definitions plus a new version of the 2021 ISDA Interest Rate Derivatives Definitions to enable parties to include the fallbacks into new derivatives transactions.

IIFM and ISDA publish IBOR Fallback Bilateral Amendment Agreement and Definitions Booklet
International Swaps and Derivatives Association, 14 December 2021
The International Islamic Financial Market (IIFM) and the International Swaps and Derivatives Association, Inc. (ISDA) have announced the publication of the ISDA/IIFM IBOR Fallback Definitions Booklet for Islamic Hedging Transactions, which will enable firms that transact under relevant documentation to agree to robust contractual fallbacks for certain key interbank offered rates (IBORs). IIFM and ISDA have also published an ISDA/IIFM Shari’ah-Compliant Bilateral Amendment Agreement template to enable institutions to agree with their counterparties to incorporate the fallbacks for existing Islamic hedges.



Replays of all of our IBOR Transition Webinar Series presentations are available via iTunes podcasts, Google play or Spotify, as well as on the IBOR Transition Webinar Series page of our dedicated IBOR Transition portal.

The last 100 days of LIBOR: Episode 6 - The Syndicated Loan Market and CLOs
Webinar, 2 December 2021
David Duffee and Sagi Tamir provide an overview of pricing developments in the syndicated loan market and how those developments may affect CLOs.

The Derivatives Market
Webinar, 15 November 2021
Ed Parker provides an overview of IBOR developments in the UK derivatives market.

The U.S. Derivatives Market
Webinar, 11 November 2021
Anna Pinedo provides an overview of IBOR developments in the U.S. derivatives market.

Where Are We Now & Where Are We Going? The Transition Away From IBORs
Webinar, 10 November 2021
Ed Parker and David Duffee provide a recap of the status of IBOR transition in the loan and derivative markets.

Antitrust Considerations for IBOR Transition
Webinar, 4 November 2021
Britt Miller and Tom Panoff discuss antitrust conduct risk related to the IBOR transition process..

Requirements of Regulators Around the World – UK, EU, Asia, and US
Webinar, 30 September 2021
Comparing regional regulatory regimes and the status of legislation to facilitate IBOR transition.

IBOR Transition – an introduction to conduct risk
Webinar, 16 September 2021
Mayer Brown partner Marlon Paz, and head of Legal Project Management David George, discusses IBOR transition conduct risk and related risk mitigation in the first of our latest IBOR transition webinar series. With approximately 100 days until most LIBOR tenors cease to be published, additional topics to be covered during 4Q2021 include global transition regulatory requirements, industry- and subject matter-specific considerations, litigation risks, and final transition preparation tips.

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