Federal Reserve Vice Chair Urges Companies, Financial Institutions to Begin Shift from LIBOR to Secured Overnight Financing Rate (SOFR)

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Noting that we are at “the start of the next critical stage in the transition away from LIBOR,” Federal Reserve Vice Chair for Supervision Randal K. Quarles delivered taped remarks at the June 3, 2019 Alternative Reference Rates Committee Roundtable, cohosted by the Alternative Reference Rates Committee and the New York University Stern School of Business and Salomon Center for the Study of Financial Institutions. Vice Chair Quarles reiterated warnings from regulators regarding the potential instability of LIBOR and stated that “[m]y key message to you today is that you should take the warnings seriously.” Quarles urged that the transition away from LIBOR should begin now and “simply to stop using LIBOR” is the easier path: “regardless of how you choose to transition, beginning that transition now would be consistent with prudent risk management and the duty that you owe to your shareholders and clients.” The Wall Street Journal reported that, “while the amount of debt linked to SOFR surpassed $100 billion last month, roughly eight times that amount of Libor-linked notes have been sold.” You can read Vice Chair Quarles’ full remarks here.

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