The Alternative Reference Rate Commission, a group of industry representatives convened by the Federal Reserve Bank of New York, has established a timetable for transitioning away from the use of Libor in the U.S. derivatives markets. Under the “paced transition plan” released on Nov. 2, the infrastructure for futures and/or overnight index swaps based on the new reference rate is expected to be in place by the second half of next year, and trading in these new products is expected to begin by the end of 2018. The timetable also covers the changes in the clearing of interest rate swaps. The plan was discussed at a roundtable hosted by ARRC on Nov. 2 that included presentations by Fed officials on the preferred alternative to U.S. dollar Libor and by ISDA officials on “fallback” language in swap documentation.
