US Agencies Issue FAQ on LIBOR Transition Impact on Regulatory Capital
US Agencies published answers to the frequently asked questions (FAQ) addressing the impact of LIBOR transition on regulatory capital instruments. These agencies are the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System (FED), and the Office of the Comptroller of the Currency (OCC). Additionally, the Alternative Reference Rates Committee (ARRC) announced that it is now formally recommending CME Group’s forward-looking Secured Overnight Financing Rate (SOFR) term rates, following the completion of a key change in interdealer trading conventions on July 26, 2021 under the SOFR First initiative.
The ARRC’s formal recommendation of SOFR Term Rates is a major milestone in the transition away from USD LIBOR, providing market participants with an essential transition tool and marking the completion of the Paced Transition Plan that the ARRC outlined in 2017 and has been working toward since. The successful SOFR First convention change, along with the continued growth in SOFR cash and derivatives markets, has allowed ARRC to recommend SOFR Term Rates, consistent with the principles and indicators it established to do so. ARRC also released a factsheet outlining key steps leading to this point, SOFR’s strengths, and upcoming milestones. This formal recommendation follows the ARRC’s July 21 announcement of conventions and recommended best practices for the use of the SOFR Term Rates. Market participants can now employ these materials when using the SOFR Term Rates in legacy fallbacks and new contracts to prepare for the end of LIBOR.
Related Links
Keywords: Americas, US, Banking, Securities, LIBOR, Benchmark Reforms, Alternative Reference Rates Committee, SOFR, Risk Free Rates, LIBOR Transition, ARRC, FAQ, Derivatives, Regulatory Capital, Basel, US Agencies
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Paul McCarney
Insurance product strategist; insurance domain expert; extensive experience developing risk assessment frameworks for insurers
Previous Article
MNB Publications Address Aspects of Lending and Green FinanceRelated Articles
ESAs Issue Multiple Regulatory Updates for Financial Sector Entities
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
EBA Finalizes Methodology for Stress Tests, Issues Other Updates
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
OSFI Sets Out Work Priorities and Reporting Updates for Banks
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
APRA Finalizes Changes to Capital Framework, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.
BIS Hub and Central Banks Conduct CBDC and DeFI Pilots
The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.
FASB Proposes Improvements to 2023 GAAP Reporting Taxonomy
The Financial Accounting Standards Board (FASB) is seeking comments, until November 03, 2022, on the proposed technical and other conforming improvements for the 2023 GAAP Financial Reporting Taxonomy.
ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations
The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.
ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector
Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)
