CONVENED BY: FEDERAL RESERVE BOARD and FEDERAL RESERVE BANK of NEW YORK

Notice:
As of February 2024, this website is no longer being updated. ARRC documents remain critical to an enduring system of robust reference rates. 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.

Fallback Contract Language

The ARRC developed recommendations for fallback language to be voluntarily incorporated in new contracts that referenced USD LIBOR to ensure those contracts would remain effective when LIBOR became unusable.

As part of those efforts, the ARRC released consultations for public feedback on fallback contract language for several cash products. After full review of public feedback at the close of each comment period, the ARRC released final recommendations on fallback language. The consultations, comments, and final recommendations, as appropriate, are broken out by cash product below.

The ARRC’s fallback language served as a template for the ARRC Proposal for New York State Legislation. Elements of the ARRC Proposal later contributed to Federal LIBOR Legislation, which minimized legal and operational risks and adverse economic impacts associated with the transition.

ARRC members were also actively engaged in work led by the International Swaps and Derivatives Association (ISDA) to consider best practices for contract robustness in derivatives contracts. In early 2021, ISDA’s IBOR Fallbacks Protocol and IBOR Fallbacks Supplement took effect. Together, they focus on strengthening existing and new derivatives contracts with durable fallback language.

ARRC Statement on Recommended Fallbacks for Implementation of its Hardwired Fallback Language (Released March 15, 2023)

Summary of Spread-Adjusted Fallback Recommendations (Released October 6, 2021)

Summary of ARRC's LIBOR Fallback Language (Released November 15, 2019)

Principles for Fallback Contract Language (Released July 9, 2018)

Spread Adjustment Methodologies for Fallbacks in Cash Products

Fallback Contract Language and Consultation Materials by Product

Adjustable Rate Mortgages

Bilateral Business Loans

Floating Rate Notes

Securitizations

Syndicated Loans

Variable Rate Private Student Loans