You should make sure that any other reference rate you use meets similarly high standards, and is fully transparent about how it’s calculated, what it’s based on, and exactly how it complies with the IOSCO principles. The ARRC and ISDA also went through an extensive public consultation process in constructing their recommended fallbacks that will kick in when LIBOR becomes unusable. The overriding goal of that process was to minimize value transfer and ensure as much as possible that the transition did not disadvantage borrowers or lenders, or one side of a LIBOR swap. And those are the same https://www.newyorkfed.org/newsevents/speeches/2020/hel200929  4/6  30/09/2020  The LIBOR Countdown Has Not Stopped - FEDERAL RESERVE BANK of NEW YORK  fallbacks that will apply under the ARRC’s proposed New York legislation. Anyone considering using different fallbacks should likewise keep those concerns top of mind. Making it Official Before I wrap up, I’d like to talk about the role of the official sector in the transition. It might seem at times that our role has consisted mostly of forming working groups and giving speeches where we harangue market participants to just get on with it already—kind of like this one. Of course, as I mentioned, the New York Fed has stepped up by producing SOFR, which is key to the transition.
15 Transition from LIBOR: Credit Sensitivity Group Workshops; see also Nathaniel Wuerffel, Transitioning Away from LIBOR:  Understanding SOFR's Strengths and Considering the Path Forward. 16 Final Rule on Margin and Capital Requirements for Covered Swap Entities. 17 Facilitating the LIBOR Transition (Regulation Z); see also the CFPB’s updated Consumer Handbook on Adjustable Rate  Mortgages and LIBOR Transition FAQs. 18 FASB Issues Guidance to Assist in Transition Away from Interbank Offered Rates to New Reference Rates; Letter to SEC  confirming treatment of interest rate reset features as embedded derivatives. See also Government Accounting Standards Board Statement No. 93, Replacement of Interbank Offered Rates and International Accounting Standards Board Staff Paper on Issues Leading up to IBOR Reform. 19 Guidance on the Transition From Interbank Offered Rates to Other Reference Rates; see also Letter from the ARRC to U.S.  Treasury Department and Internal Revenue Service regarding proposed regulations and Letter from the ARRC to U.S. Treasury Department and Internal Revenue Service requesting guidance regarding financial contract discount rate transition. 20 CFTC Provides Relief to Market Participants Transitioning Away from LIBOR; CFTC Provides Additional Relief to Market  Participants Transitioning from LIBOR; see also Letter from the ARRC to the CFTC regarding treatment of discount rate changes by derivatives clearing organizations. 21 FHFA, Libor Transition. 22 FHFA Announces Fannie Mae and Freddie Mac Update on LIBOR Transition, February 5, 2020. 23 Fannie Mae to Accept Single-Family SOFR ARM Products Beginning August 3, 2020; SOFR-Indexed ARMS. See also their LIBOR  Transition Playbook.