Global interest rate benchmark reform and LIBOR fallback planning

LIBOR – the London Interbank Offered Rate – was the most widely used interest rate in the world and was embedded as a benchmark rate in a wide range of financial instruments and transactions worldwide – from corporate loans and bonds to derivatives and futures to mortgages and other financial products.  As of January 1, 2022, the publication of 24 of the 35 LIBOR settings has ceased. As a result, the global financial markets are experiencing a seismic shift that could have a significant impact on many lenders, borrowers and other participants in the capital markets. Calculated in euros, U.S. dollars, British pounds sterling, Japanese yen and Swiss francs, LIBOR and analogous reference rates were relied upon to determine interest for an estimated US$370 trillion in financial instruments.[1]

In Canada, Federally Regulated Financial Institutions were expected to stop using LIBOR as a reference rate in new transactions by the end of 2021 and use an alternative reference rate. The elimination of LIBOR presents a global challenge as financial markets participants seek to replace LIBOR and analogous rates with more robust and reliable interest rate benchmarks. Reform efforts are progressing at different speeds in different jurisdictions. A disorderly transition has the potential to be disruptive for banks and their clients. Benchmark transition affects a large number of derivatives and credit products used by banks, and the conversion to new benchmark rates – known as “LIBOR fallback planning” – is a significant and critical undertaking.

Assess, amend, implement

To avoid major disruption, banks must engage in advanced LIBOR fallback planning now. Global regulators have suggested that financial institutions aren’t doing enough and aren’t acting quickly enough. A strategic starting point is to gain a thorough understanding of

  • the impact of the LIBOR fallback transition across the enterprise, including assessing all affected products and instruments (e.g., loans, structured products, short-term money market products, bonds and derivatives)
  • the due diligence necessary to identify LIBOR-related amendments that need to be applied to various financial instruments, including whether affected contracts provide for a fallback rate
  • the tax implications of LIBOR-related amendments
  • the impact of a new benchmarking rate on treasury models and processes at an institutional level, including on balance sheets and risk exposures, accounting policies and processes, reassessments of tax assets and liabilities, transfer pricing and funding practices, and loan and debt issuance programs
  • the litigation risk associated with implementation of LIBOR fallback planning

Once an assessment has been completed, this insight can be leveraged to develop a plan that is comprehensive and cost-effective and that effectively manages legal risk for the enterprise.

How Osler can help

As the only Canadian law firm represented on the Legal Committee of the Canadian Alternative Reference Rate working group (CARR) established by the Bank of Canada and the ISDA Americas and Europe Benchmarking Working Group, Osler is on the leading edge of benchmark rate reform and transition and is uniquely positioned to provide insight and advice to market participants regarding LIBOR fallback planning. Banks and other financial market participants turn to Osler for assistance with enterprise-wide LIBOR fallback risk assessment, planning and implementation solutions.

As the global transition efforts continue to progress, we will update this page and the resources listed below to provide the most up-to-date information about this significant milestone.

Helpful resources

Benchmark Fallbacks resources from the ISDA

The International Swaps and Derivatives Association provides a series of pages devoted to issues related to benchmark fallbacks, from timelines and consultations to the organization’s response to proposed reform in various jurisdictions around the world. Read more

Alternative Reference Rates Committee

The Alternative Reference Rates Committee is a group of private-market participants convened by the Federal Reserve Board and the New York Fed to help ensure a successful transition from the USD LIBOR to its recommended alternative, the Secured Overnight Financing Rate (SOFR). Read more

The Official Sector Steering Group (OSSG) of the Financial Stability Board

The Financial Stability Board was tasked with undertaking a fundamental review of major interest rate benchmarks and to develop proposals for reform. It established the Official Sector Steering Group in July 2013 and published its recommendations in July 2014. Read more

Bank of Canada Canadian Alternative Reference Rate Working Group

The Canadian Alternative Reference Rate Working Group was created with a mandate to identify and develop a new Canadian dollar term risk-free rate benchmark. Read more

International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks

The Board Level Task Force on Financial Market Benchmarks of the International Organization of Securities Commissions (IOSCO) published its final report that sets out IOSCO’s final Principles on Financial Benchmarks. Read more

ICMA Benchmark Reform

The International Capital Market Association has been consulting with regulators and members on the issue of benchmark reform for several years and is currently focused on developing Risk-Free Reference Rates in response to the Financial Stability Board’s recommendations. Read more

Loan Market Association LIBOR microsite

The Loan Market Association (LMA) is working with the market, other trade associations and the regulators on the LIBOR transition. To keep market participants up to date, LMA has created a LIBOR microsite for its members. Read more

Recent articles

Refinitiv announces 2024 CDOR cessation

Osler, Hoskin & Harcourt LLP – May 17, 2022

Following public consultation and a Canadian Alternative Reference Rate working group white paper, Refinitiv Benchmark Services (UK) Limited announced on May 16, 2022, that it would cease the calculation and publication of all tenors of the Canadian Dollar Offered Rate (CDOR) immediately following a final publication on Friday, June 28, 2024. Read more

Libor, Long the Most Important Number in Finance, Dies at 52

The New York Times – January 12, 2022

The London interbank offered rate (Libor), a number that for decades was a central force of international finance and was used in setting interest rates on everything from mortgages to student loans, has died after a long battle with regulators. Libor once underpinned more than $300 trillion in financial contracts but was undone after a yearslong market-rigging scandal came to light in 2008. The benchmark could no longer be used to calculate new deals as of Dec. 31 — more than six years after a former UBS trader was jailed for his efforts to manipulate it. Libor, Long the Most Important Number in Finance, Dies at 52

As LIBOR rates fade away, alternative rates get a closer look

Yahoo Finance – December 31, 2021

In the U.S., a group of private participants including the Federal Reserve Board and the New York Fed have encouraged the use of the Secured Overnight Financing Rate (SOFR). This is a broad measure of how much banks are paying each other to borrow cash overnight, when secured by U.S. Treasury securities as collateral. Other alternatives exist that attempt to index unsecured rates.As LIBOR fades away, alternative rates get a closer look

LIBOR fears persist for loan market with six months to deadline

BNN Bloomberg News – June 25, 2021

This article reports on survey results from Barclays Plc which shows that only half of loan investors believe their instruments have robust fallback language to ensure a smooth transition from LIBOR. The responses show just how much work remains to be done with only six months left before the LIBOR deadline. Read more

European authorities issue statement on LIBOR cessation

Moody’s Analytics – June 24, 2021

This news item reports on a joint statement by several European authorities encouraging market participants to use the time remaining until the LIBOR cessation to substantially reduce their exposures to these rates. The statement emphasizes that the European authorities will monitor the situation and LIBOR exposures closely. Read more

OSFI outlines expectations on LIBOR transition

Office of the Superintendent of Financial Institutions (OSFI) – June 22, 2021

In this document, OSFI outlines its expectations of federally regulated financial institutions (FRFIs) as they transition away from LIBOR. These expectations include prioritizing system and model updates to accommodate risk-free rates by the end of 2021, and for FRFIs to be fully prepared to transact in risk-free rates that are available in jurisdictions or markets in which the FRFI operates by the end of 2021. Read more

ISDA Press Briefing: The end of Libor – What it means for derivatives markets

ISDA – March 29, 2021

On March 5, the UK Financial Conduct Authority announced the dates that all LIBOR settings will either cease or become non-representative. The announcement means market participants now have a clear timetable that will allow them to transition to alternative reference rates with greater certainty. This virtual press briefing explores what the announcement means for derivatives markets. Learn more

Legislative solutions to U.S. dollar LIBOR cessation

Osler, Hoskin & Harcourt LLP – March 19, 2021

Contractual solutions to U.S. dollar LIBOR cessation are essential, but they may not be sufficient. Enter legislation. In this Update, Andrew Herr looks at possible New York State and U.S. federal legislative solutions to U.S. dollar LIBOR cessation. Read more 

LIBOR endgame announced

Osler, Hoskin & Harcourt LLP – March 10, 2021

On March 5, 2021, the United Kingdom’s Financial Conduct Authority (FCA) and ICE Benchmark Administration (IBA) issued key announcements with regard to the future cessation and loss of representativeness of the London Interbank Offered Rate (LIBOR) for all currencies and settings. This Update discusses the FCA and IBA announcements and implications for credit agreements and derivatives. Read more 

A Big Milestone for Benchmark Reform 

ISDA - January 27, 2021

ISDA Chief Executive Officer Scott O'Malia offers informal comments on important OTC derivatives issues, including the ISDA's new fallbacks coming into effect. Read more

A resolution for 2021: No new LIBOR

Federal Reserve Bank of New York - December 10, 2020

This article presents remarks made by Federal Reserve Bank of New York Senior Vice President Nathaniel Wuerffel at the Securities Industry and Financial Markets Association's LIBOR Transition Forum, delivered via videoconference. Read more 

Flexibility in the financial market in response to major changes

Osler, Hoskin & Harcourt LLP - December 8, 2020

In 2020, financial market participants have been subject to many unprecedented changes that have forced them to show a great deal of flexibility. This Legal Year in Review article highlights two of these events: the cessation of LIBOR and the impact of the COVID-19 pandemic. Read more

LIBOR needs a legislative fix even if demise has been delayed

BNN Bloomberg - December 2, 2020

Delaying the end of dollar LIBOR until mid-2023 may provide breathing room, but it doesn’t remove the need for a legislative solution for contracts that will still be linked to the benchmark when it eventually expires, according to this article. Read more 

U.S. agencies urge banks to use fallback language in legacy contracts

Moody’s Analytics – November 6, 2020

U.S. agencies including the FDIC, FED and OCC issued a joint statement encouraging banks to prepare for the use of alternative reference rates for their lending activities. Read more

A major milestone for Benchmark Reform 

ISDA -  October 26, 2020

ISDA Chief Executive Officer Scott O'Malia offers informal comments on important OTC derivatives issues and discusses the ISDA launching the IBOR Fallbacks Supplement and protocol, as well as the significance of fallbacks, among other topics. Read more

FSB sets out roadmap for transition to alternative reference rates

Moody’s Analytics – October 16, 2020

The Financial Stability Board (FSB) has published a global transition roadmap for the London Inter-bank Offered Rate (LIBOR). The roadmap sets out a timetable of actions for financial and non-financial sector firms to take to ensure a smooth LIBOR transition by the end of 2021. Read more

ISDA formally launches protocol for rate fallbacks on derivatives

ABA Banking Journal - October 9, 2020

The International Swaps and Derivatives Association announced that it will launch its framework for reference rate fallbacks on October 23. Read more

EU markets watchdog has no plans to scrap Euribor benchmark 

Nasdaq - September 21, 2020 

The European Union's markets watchdog said that Euribor, a euro version of LIBOR, will be available for the foreseeable future. Read more 

Market must "wake up" over LIBOR misinterpretations 

The Global Treasurer - September 21, 2020 

While the COVID-19 pandemic has distracted market participants, many are still sleep walking towards the transition away from LIBOR, with concerns raised over a lack of understanding behind the methodologies shaping the fallback language and the new rates, according to this article in The Global Treasurer. Read more

Credit agreement best practice – LIBOR cessation

Osler, Hoskin & Harcourt LLP – September 16, 2020

This Update discusses preparations for LIBOR cessation in the context of credit agreements, including best practices recommended by the Alternative Reference Rates Committee. Read more

ARRC Updates Libor Fallback Language for Business Loans

ABA Banking Journal – August 27, 2020

On August 27, 2020, the Alternative Reference Rates Committee released updated recommended fallback language for newly originated bilateral business loans that reference the London Interbank Offered Rate. According to the ABA Banking Journal, the updated language adjusts the “hardwired” and “hedged loan” approaches described in last year’s recommended language. Read more

ISDA Board Statement on Adherence to the IBOR Fallback Protocol

ISDA - July 29, 2020

The ISDA's Board of Directors published a statement on adherence to the forthcoming IBOR Fallback Protocol. Read more

ARRC Announces Spread Adjustment Methodologies, Issues New Fallback Language

ABA Banking Journal - June 30, 2020 

On June 30, 2020, the Alternative Reference Rates Committee (ARRC) outlined how it will implement its methodologies for calculating spread adjustments on financial products that reference the London Interbank Offered Rate. Read more

LIBOR Update: New SOFR Guidance, Fed Comments on Ameribor

Association for Financial Professionals - June 9, 2020 

New guidance has been released by the Federal Reserve’s Alternative Reference Rates Committee on transitioning away from LIBOR to the Secured Overnight Financing Rate. Read more

ARRC Recommended Best Practices for Completing the Transition from LIBOR

Federal Reserve Bank of New York - May 2020

The Alternative Reference Committee has developed a set of recommended best practices to assist market participants in preparing for the cessation of U.S. dollar LIBOR by the end of 2021. This document sets forth recommended timelines and intermediate steps market participants can take to achieve a successful transition. Read more [PDF]

BoE Notice on Eligibility of LIBOR-Linked Collateral for Use in SMF

Moody's Analytics - May 7, 2020

According to a Market Notice issued by BoE on its risk management approach to collarateral referencing LIBOR for use in Sterling Monetary Framework (SMF), all LIBOR-linked collateral will be ineligible for use in SMF from December 31, 2021. Read more

ISDA outlines results of consultation on pre-cessation LIBOR fallbacks 

Moody's Analytics - April 15, 2020

ISDA announced preliminary results of the consulation on implementation of pre-cessation fallbacks for derivatives referenced to LIBOR. While the results are subject to further analysis, ISDA expects to move forward on the basis that pre-cessation fallbacks based on a "non-representativeness" determination and permanent cessation fallbacks would apply to all new and legacy derivatives referencing LIBOR that incorporate the amended 2006 ISDA Definitions. Read more

ISDA announces preliminary results of consultation on pre-cessation fallbacks for LIBOR

ISDA - April 15, 2020

The initial results of ISDA's consultation on the implementation of pre-cessation fallbacks for derivatives referenced to LIBOR indicate support for including both pre-cessation and permanent cessation fallbacks as standard language in the amended 2006 ISDA Definitions for LIBOR and in a single protocol for including the updated definitions in legacy trades. Read more

ISDA paper outlines developments on risk-free rate adoption in 2020

Moody's Analytics - Feb 12, 2020

ISDA published a research paper that examines several major upcoming developments on the adoption of risk-free rates in 2020. This article highlights the key developments outlined in the research paper. Read more

ISDA/SIFMA AMG Benchmark Strategies Forum 

ISDA - Feb 12, 2020

This transcript of the Benchmark Strategies Forum discusses how there is no guarantee that LIBOR will be published after the end of 2021, so this year will be the one that counts when it comes to preparing for the shift to risk-free rates. Read more

ISDA to re-consult on pre-cessation fallbacks

ISDA - Feb 5, 2020

ISDA has announced that it will re-consult on how to implement pre-cessation fallbacks. Based on the results of that consultation, ISDA will move quickly to deliver the appropriate, industry endorsed fallback solution later this year. Read more

ARCC seeks feedback on spread adjustment methodologies for LIBOR transition 

ABA Risk and Compliance - January 21, 2020 

The Alternative Reference Rates Committee sought public feedback on methodologies for calculating spread adjustments on financial products that reference the London Interbank Offered Rate. Read more

Statement on communication and outreach to inform relevant stakeholders regarding benchmarks transition

The Board of the International Organization of Securities Commissions – July 31, 2019

This statement sets out matters for market participants to consider if they have exposure to LIBOR, particularly USD LIBOR, in light of its expected cessation after the end of 2021 and USD LIBOR’s widespread global use. Read more

ISDA publishes preliminary results of supplemental benchmark fallbacks consultation

International Swaps and Derivatives Association, Inc. – July 30, 2019

The ISDA published a statement summarizing the preliminary results of a supplemental consultation on adjustments that would apply to fallback rates in the event certain interbank offered rates are permanently discontinued. A supplemental consultation was launched in May, which set out options for spread and term adjustments if fallbacks are triggered for derivatives referencing US dollar LIBOR, Hong Kong’s HIBOR and Canada’s CDOR. Read more

Waiting for the sun to set on LIBOR or being proactive? See regulation as an opportunity for change

Finextra – July 29, 2019

This blog post discusses steps market participants can take to plan for the sunset of LIBOR. Read more

Transitioning From LIBOR

Commercial Property​ Executive – July 24, 2019

According to author Jamie Woodwell, uncertainty surrounds strategies for managing the transition away from LIBOR, as many firms wait on the sidelines for others to take the lead. Read more

Legal ease: Farewell to LIBOR

Funds Europe – July 22, 2019

This article discusses considerations that funds should keep in mind in their approach on how to deal with the LIBOR transition. Read more

SEC statement highlights risks to consider during LIBOR transition

Moody’s Analytics – July 12, 2019

This article discusses a statement issued by the Securities and Exchange Commission, which encourages market participants to proactively manage their transition away from LIBOR and outlines several potential areas that may warrant increased attention during the transition. Read more


SEC advises market participants on move away from LIBOR

Financial Regulation News – July 16, 2019

This article explores how the Securities and Exchange Commission is encouraging market participants to transition away from using LIBOR as a reference for setting the interest rates on loans. Read more

Fed tells financial firms to stop dawdling in their move away from LIBOR  

FinanceFeeds – July 16, 2019

As regulators look to coerce the banks into doing away with LIBOR before they have to by law, this article explores whether this could be the age of the non-bank market maker and fully self-sufficient OTC derivatives industry. Read more

SEC urges market participants to prepare for LIBOR transition

ABA Banking Journal – July 15, 2019

This article discusses the Securities and Exchange Commission’s statement that warns of potential consequences for financial markets if LIBOR is discontinued. Read more

901 Days – Remarks by John C. Williams, President and Chief Executive Officer, New York Fed

Federal Reserve Bank of New York – July 15, 2019

This speech by John C. Williams, given at the Securities Industry and Financial Markets Association, provides his thoughts on why replacing LIBOR is so critical and the progress that has been made to move toward a more sound reference rates regime. Read more

Fed-backed group outlines framework on SOFR-linked mortgages

Nasdaq – July 11, 2019

This article discusses a proposal by a group backed by the Federal Reserve and other U.S. government agencies on how the mortgage industry would adopt a new reference rate for loans. Read more

Firms that delay the switch out of LIBOR face enforcement action, rising costs

S&P Global Market Intelligence – June 25, 2019

This article explains that while regulators expect LIBOR to disappear by the end of 2021, the longer firms delay switching to alternative rates, the more costly it could be for them. Read more

Firms need to do more to prepare for LIBOR transition

The Global Treasurer – June 12, 2019

This article discusses why the Deputy Governor for Markets & Banking at the Bank of England believes that organizations need to do more to prepare for the switch from LIBOR to a Bank of England alternative by the end of 2021. Read more

LIBOR: Why 2022 is coming faster than you think

Association for Financial Professionals – June 11, 2019

This article examines a meeting at the U.S. Chamber of Commerce that discussed how while corporate treasury departments have time to prepare for the transition away from LIBOR, 2022 is fast approaching. Read more

Fed warns that the end of LIBOR really is coming, so be prepared

BNN Bloomberg – June 3, 2019

LIBOR is coming to an end and the Federal Reserve says markets need to take that “seriously,” according to this article. Read more

LIBOR’s end forces global banks to juggle multiple replacements

Bloomberg – June 2, 2019

This article offers an overview of the ongoing transition away from LIBOR and the varying levels of progress being made by different jurisdictions around the world. Read more

LIBOR transition panel issues fallback language for bilateral business loans, securitizations

ABA Banking Journal – May 31, 2019

This article discusses the Alternative Rates Committee issuing its fallback language recommendations for bilateral business loans and securitizations that reference the U.S. dollar LIBOR. Read more

Another step to benchmark fallbacks

International Swaps and Derivatives Association – May 29, 2019

This article contains commentary from ISDA chief executive officer Scott O’Malia on important OTC derivatives issues. Read more