About
The ARRC was a group of private-sector participants convened to help ensure a successful transition from U.S. dollar (USD) LIBOR to a more robust reference rate, its recommended alternative, the Secured Overnight Financing Rate (SOFR). It was comprised of a diverse set of private-sector entities as members, each with an important presence in markets affected by the transition from USD LIBOR, and a wide array of official-sector entities as ex-officio members. Specifically, the ARRC was convened by the Federal Reserve Board and the Federal Reserve Bank of New York in cooperation with the Commodity Futures Trading Commission, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Association of Insurance Commissioners, the New York Department of Financial Services, the Office of Financial Research, the Office of the Comptroller of the Currency, the U.S. Department of Housing and Urban Development, the U.S. Securities and Exchange Commission, and the U.S. Treasury Department.
In response to Financial Stability Board and Financial Stability Oversight Council recommendations to address LIBOR's risks—most notably that it was not anchored in actual market activity, leaving it vulnerable to manipulation—the Federal Reserve Board and the New York Fed jointly convened the ARRC in 2014.
The ARRC’s initial objectives were to identify risk-free alternative reference rates for USD LIBOR, identify best practices for contract robustness, and create an implementation plan with metrics of success and a timeline to support an orderly transition. The ARRC accomplished its first set of objectives, and in 2017, identified SOFR as the rate that represents best practice for use in certain new USD derivatives and other financial contracts. It also published its Paced Transition Plan, with specific steps and timelines designed to encourage adoption of SOFR.
Also in 2017, LIBOR’s regulator announced that it could not guarantee LIBOR’s existence after 2021. This announcement caused many market participants to view the ARRC’s work differently: from seeing the work as contingency planning to guard against a hypothetical risk that LIBOR could end, to as necessary with the expectation that LIBOR would end.
The ARRC was reconstituted in 2018 with an expanded membership to help ensure the successful implementation of the Paced Transition Plan, serve as a forum for planning across products and market participants using USD LIBOR, and address risks in legacy contract language.
The five years that followed marked an acceleration in the ARRC’s work. This time period included the development of recommended fallback language for cash product contracts, the promotion of numerous tools to support voluntary adoption of SOFR, the enactment of federal legislation with a targeted solution for contracts with no effective means to replace LIBOR, the recommendation of Term SOFR and its Scope of Use, and eventually, the cessation of USD LIBOR in June 2023.
The ARRC was terminated in November 2023, after fulfilling its mandate pursuant to its Terms of Reference. During its tenure, the ARRC created 12 separate working groups involving over 400 separate firms, organizations, and agencies. It produced more than 60 separate publications and held over 20 public events.
As noted in the ARRC’s Closing Report, the New York Fed plans to launch a new sponsored group in 2024 to promote the integrity, efficiency, and resiliency in use of reference rates and to promote the ARRC’s critical best practice recommendations.
The ARRC's work complemented similar efforts in other LIBOR currency jurisdictions. After all, the transition was not limited to USD LIBOR, and building a system of robust reference rates necessitated international coordination. For more details on international efforts for reference rate reform, see the working groups in the U.K., Switzerland, Japan, the euro area, and the Official Sector Steering Group (OSSG).
Terms of Reference | Antitrust Guidelines
Governance of the ARRC
The ARRC was comprised of a broad set of private-sector participants as members—including banks, asset managers, insurers, and industry trade organizations—and official-sector ex-officio members. The ARRC was last chaired by Peter Phelan, Managing Director in the Office of the Chief Operating Officer at Citi.
Members
American Bankers Association
Association for Financial Professionals
AXA
Bank of America
BlackRock
Citi
CME Group
Comerica
CRE Finance Council
Deutsche Bank
Fannie Mae
Ford Motor Company
Freddie Mac
GE Capital
Goldman Sachs
Government Finance Officers Association
HSBC
Huntington
Intercontinental Exchange
International Swaps and Derivatives Association
JPMorgan Chase
KKR
LCH
MetLife
Morgan Stanley
National Association of Corporate Treasurers
Pacific Investment Management Company
PNC
Prudential Financial
Structured Finance Association
TD Bank
The Federal Home Loan Banks, through the Federal Home Loan Bank of New York
The Independent Community Bankers of America
The Loan Syndications and Trading Association
The Securities Industry and Financial Markets Association
U.S. Chamber of Commerce
Wells Fargo
World Bank Group
Ex Officio Members
Commodity Futures Trading Commission
Consumer Financial Protection Bureau
Federal Deposit Insurance Corporation
Federal Housing Finance Agency
Federal Reserve Bank of New York
Federal Reserve Board
National Association of Insurance Commissioners
New York Department of Financial Services
Office of Financial Research
Office of the Comptroller of the Currency
U.S. Department of Housing and Urban Development
U.S. Securities and Exchange Commission
U.S. Treasury
Observers
Bank of Canada
BNP Paribas
Cadwalader
Morgan Lewis
Venerable
Working Groups of the ARRC
The ARRC was supported by 12 working groups focused on specific objectives to help enable a smooth transition from USD LIBOR. The working groups’ recommendations helped the ARRC to facilitate discussions and make informed decisions.
The working groups included interested parties beyond ARRC members alone, to provide broad coverage of applicable markets and necessary expertise.
The Working Group Chairs listed below were in those roles as of the conclusion of the ARRC.
All Working Groups
Chair: Jeannine Hyman (Citigroup)
The group was responsible for identifying and working with relevant authorities to address accounting and tax issues to minimize potential disruptions associated with the transition away from USD LIBOR.
Chairs: Hu Benton (ABA) and Meredith Coffey (LSTA)
The group was responsible for developing recommended contract language that would provide more robust fallbacks for syndicated business loans and bilateral business loans in the event that USD LIBOR became unusable. The group also worked on strategies to address risks in legacy contracts that would not roll off before end-2021. Additionally, the group developed recommended conventions for using SOFR in business loans.
Chair: David Beck (JPMorgan Chase)
The group developed recommended contract language that would provide more robust fallbacks for consumer loans in the event that USD LIBOR became unusable. It coordinated actively with consumer groups and worked on strategies to address risks in legacy contracts that would not roll off before end-2021.
Chair: Brian Grabenstein (Wells Fargo)
The group was responsible for developing recommended contract language that would provide more robust fallbacks for floating rate notes in the event that USD LIBOR became unusable. The group also worked on strategies to address risks in legacy contracts that would not roll off before end-2021. Additionally, the group developed recommended conventions for using SOFR in floating rate notes.
Chairs: Maria Douvas-Orme (Morgan Stanley) and Emilio Jimenez (JPMorgan Chase)
The group was responsible for identifying and working with relevant parties to address legal issues that could hinder the transition away from USD LIBOR. It also served as a resource on legal issues that came up during the ARRC’s transition efforts. Additionally, the group developed the ARRC’s proposal for New York State legislation, which was intended to minimize legal uncertainty and adverse economic impacts associated with the LIBOR transition.
Chairs: Adam Eames (Deutsche Bank) and Guillaume Helie (Goldman Sachs)
The group was responsible for making recommendations for integrating structures of futures and other derivatives referencing SOFR. In certain areas, the group consulted with committees in other jurisdictions to facilitate close coordination. The group also tracked progress in the ARRC’s Paced Transition Plan and considered options for the voluntary use of derivatives referencing SOFR. Additionally, the group developed recommended voluntary conventions for using SOFR in derivatives, including recommended fallbacks for contracts linked to the USD LIBOR ICE Swap Rate.
Chairs: Tom Deas (National Association of Corporate Treasurers) and Tom Hunt (Association for Financial Professionals)
The group was focused on readiness of non-financial corporations for the LIBOR transition. It coordinated actively with institutions on issues relevant to non-financial corporations such as vendor readiness, intercompany and customer loans, back-office systems, and voluntary structures and conventions for non-financial corporate borrowing. Additionally, the group developed recommended voluntary conventions for using SOFR in intercompany and customer loans.
Chairs: Oliver Bader (BNY Mellon), Scott Longo (State Street), Alexey Surkov (Deloitte)
The group focused on the many procedural transition aspects of legacy LIBOR transactions. It produced readiness checklists and several vendor readiness surveys, in addition to working with DTCC on its LIBOR transition communications tool.
Chairs: Andrew Gray (JPMorgan Chase) and Charles Schwartz (Venerable)
The group was responsible for coordinating the ARRC’s public engagement and education efforts in order to inform market participants and other interested parties about ARRC-related work and the risks associated with USD LIBOR.
Chairs: Priya Bindra (Morgan Stanley), Maria Ines-Raij (Morgan Stanley), and Simon Winn (BNP Paribas)
The group was responsible for identifying potential regulatory hurdles that could hinder the transition away from USD LIBOR. The group highlighted these issues to regulatory agencies and self-regulatory organizations to help facilitate the uptake of SOFR and help minimize potential disruptions in the event that USD LIBOR became unusable.
Chairs: Kristi Leo (Structured Finance Association) and Lisa Pendergast (CRE Finance Council)
The group was responsible for developing recommended contract language that would provide more robust fallbacks for residential mortgage-backed securities, commercial mortgage-backed securities, asset-backed securities, and collateralized loan obligations in the event that USD LIBOR became unusable. The group also worked on strategies to address risks in legacy contracts that would not roll off before end-2021. Additionally, the group developed recommended conventions for using SOFR in securities and collateralized loan obligations.
Chairs: Alice Wang (JPMorgan Chase) and Alex Kroll (Blackrock)
The group was responsible for developing and evaluating various options for the construction of SOFR term rates to help some cash products transition away from USD LIBOR. The group also considered how term rates could be integrated with trading in the derivatives markets referencing SOFR.