On December 7, 2020, the Alternative Reference Rates Committee (ARRC) released a guide to recent announcements made by US and UK regulators, as well as by ICE Benchmark Administration (IBA), the administrator of LIBOR, regarding the proposed endgame for US dollar (USD) LIBOR.

According to the ARRC, the developments announced on November 30, 2020, detailed in the guide, taken together, propose a clear framework for ending USD LIBOR that would facilitate an orderly transition and accelerate market participants' use of the Secured Overnight Financing Rate (SOFR). These releases call for market participants to stop writing new USD LIBOR contracts by the end of 2021, while allowing most legacy contracts to mature before USD LIBOR discontinues.

In addition, also covered in the guide, on December 4, 20202, the administrator of LIBOR, the ICE Benchmark Administration (IBA), released a consultation on December 4 on its intention to cease the publication of LIBOR settings (see Legal Update, IBA Announces Projected End Dates for USD LIBOR with Extension for Certain USD LIBOR Settings Until June 2023).

With respect to USD LIBOR, this includes proposed end dates immediately following the December 31, 2021 publication for the minor LIBOR settings (one week and two month) and, immediately following the June 30, 2023 publication, for the major USD LIBOR settings (overnight, and 1, 3, 6, and 12-month). The consultation will be open for feedback until January 25, 2021 and IBA “intends to share the results of the consultation with the FCA and to publish a feedback statement summarizing responses from the consultation shortly thereafter.”

The guide also covers what ARRC sees on the horizon for USD LIBOR’s endgame and the ARRC’s work, regarding the setting of a spread adjustment, the ARRC’s legislative proposal with New York State, and the ARRC’s Recommended Best Practices.

For more information on these developments, as well as other Practical Law LIBOR and interest rate benchmark reform materials, see LIBOR Replacement Toolkit.