On October 5, 2021, Federal Reserve Board Vice Chair for Supervision Randal K. Quarles spoke at The Structured Finance Association Conference in Las Vegas on “Goodbye to All That: The End of LIBOR.”
- Quarles reminded his audience that while LIBOR will no longer be a functional index after June 30, 2023, it will not be available for use in any new contracts after the end of 2021 — just 85 days from today.
- The Federal Reserve and other regulators have made it clear they will focus clearly on whether their supervised institutions stop new use of LIBOR by the end of this year.
- After that date, the only use for LIBOR will be as an index for older contracts, which should be maturing by June 2023.
- Reviewing banks’ cessation of LIBOR use after year-end will be one of the highest priorities of the Fed’s bank supervisors in the coming months. If market participants do use a rate other than the Secured Overnight Financing Rate (SOFR), they should ensure that they understand how their chosen reference rate is constructed, that they are aware of any fragilities associated with that rate, and—most importantly—that they use strong fallback provisions.”
Compliance Resource is conducting a two-hour webinar, entitled LIBOR Transition, on November 1, 2021.