On 19 July 2022, the Federal Reserve Board (the “Board”) published a notice of proposed rulemaking – Regulation Implementing the Adjustable Interest Rate (LIBOR) Act, as it was required to do by Section 110 of the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”), which was signed into law on 15 March 2022.
In its related press release, the Board notes, “Consistent with the [LIBOR Act], the proposal would replace references to LIBOR in certain contracts with the applicable Board-selected replacement rate after June 30, 2023. The contracts include those governed by [US] law that do not mature before LIBOR ends and that lack adequate fallback provisions. The proposal identifies separate Board-selected replacement rates for derivatives transactions, contracts where a government-sponsored enterprise is a party, and all other affected contracts. As required by the [LIBOR Act], each proposed replacement rate is based on the Secured Overnight Financing Rate.”