On June 11, during a meeting of the Financial Stability Oversight Council, top U.S. regulators from Treasury Secretary Janet Yellen to Federal Reserve Chairman Jerome Powell reminded banks to cease use of the LIBOR index. Policymakers are warning that entering into new LIBOR-linked contracts will produce significant financial risks, reiterating the wake-up call on the importance of transition plans to alternative rates. Several officials, including Securities and Exchange Commission Chair Gary Gensler, have labeled the Secured Overnight Financing Rate (SOFR) as the safest alternative. The push for SOFR adoption received a boost earlier this week when the Commodity Futures Trading Commission advised brokers in derivatives trading to stop using LIBOR starting July 2. This announcement could accelerate the creation of officially sanctioned term SOFR rates and the phase out of LIBOR.
You can access SFA Key Resources and more information about the LIBOR transition by clicking here.