Some items on our site have recently moved. Visit our News Hub for selected articles, special reports, podcasts and other resources.
US Libor panel to decide on seeking legislative relief from certain contracts
06 Jun 2019 12:47 pm by Neil Roland
A US Federal Reserve-sponsored Libor panel hopes to decide in the next few months whether to seek legislative relief from some existing contract requirements that are impeding a shift from the benchmark, said Tom Wipf, head of the Alternative Reference Rates Committee.
“There may be no solution for some of these products,” he said at a committee roundtable this week. “We need to be sure that the legal arguments are fully considered before deciding whether to take any steps.”
“The analysis is in its very early stages, and it is not yet ready for 'prime time,'” said Wipf, a Morgan Stanley vice chairman.
Consideration of an approach to the legislature of New York and possibly other states has generated interest from market participants in a bind about how to comply with regulators’ 2021 deadline.
“Obviously a legislative approach is something folks are wanting to hear more about in the future,” Sairah Burki, a senior director at the Structured Finance Industry Group, said at the roundtable.
Legacy cash products
The private-sector panel is focusing its discussion on existing, or legacy, cash products such as securitizations and floating rate notes, Wipf said.
Some securitizations are under contracts that won’t mature until the end of 2025, according to a report last year by the committee. These contracts reference Libor. To change the benchmark requires approval by 100 percent of the noteholders under most contracts.
“It’s impossible to identify who all your noteholders are,” Burki said.
The committee has been discussing possible legislative relief for months behind closed doors, minutes of its meetings show.
It has hired New York-based law firm Cadwalader, Wickersham & Taft to “define the scope of any potential legislative relief efforts and the policy rationale for that scope,” minutes of the April meeting say.
The Fed-sponsored panel is overseeing the US transition to another interest-rate benchmark, Secured Overnight Financing Rates, with the goal of completing this shift by the end of 2021, when official support for scandal-plagued Libor will end.
25 Feb 2021 12:00 am by Neil RolandUS bank syndicates’ high-interest loans to heavily indebted companies pose credit risks that are “high and increasing,” banking regulators said.
03 Feb 2021 12:00 amChina’s finance regulators are dealing with antitrust-enforcement issues after the country’s leaders pledged to prevent the expansion of capital in the economy.
Wall Street group rips US exchanges’ proposal to cap their Consolidated Audit Trail liability for data breaches03 Feb 2021 12:00 am by Neil RolandA Wall Street banking group said it was “fundamentally unfair” of the US stock and options exchanges to propose limiting their liability for data breaches.