August 29, 2022

Submitted to: [email protected]

Ann E. Misback
Secretary
Board of Governors of the Federal Reserve System
20th Street and
Constitution Avenue NW
Washington, DC 20551

Re: RIN 7100–AG34 / Docket No. R–1775 / Regulation Implementing the Adjustable Interest Rate (LIBOR) Act

Dear Ms. Misback,

SIFMA1 is pleased to respond to the Federal Reserve Board’s proposed rule (“Proposed Rule”)2 that would implement the Adjustable Interest Rate (LIBOR) Act (“the Act” or “statute”).3 SIFMA has long been a strong advocate for Federal legislation that provides clarity and a means for the transition of so-called tough legacy contracts to alternative benchmarks. We believe the Act is a tremendously important component of the finalization of the transition away from LIBOR. The Proposed Rule that implements the Act is similarly important, and we are pleased that the Proposed Rule generally tracks the legislation in a close manner. We do, however, have some conceptual and other more granular comments on the Proposed Rule, and discuss our views and suggestions below.

A. “Covered Contracts” and “Non-Covered Contracts”

The Proposed Rule creates a regulatory delineation between “covered contracts” and “non-covered contracts”. We believe this is intended to categorize contracts with respect to the application of the regulation, but these terms do not appear in the statute, and the delineation does not exactly track the scope of the statute. We do not believe the delineation of covered vs. non-covered contracts is useful and instead has caused confusion among market participants.

 

1 SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA).

2 Board of Governors of the Federal Reserve System, “Regulation Implementing the Adjustable Interest Rate (LIBOR) Act” (July 28, 2022), available here: https://www.federalregister.gov/documents/2022/07/28/2022-15658/regulation-implementing-the-adjustable-interest-rate-libor-act

3 Adjustable Interest Rate (LIBOR) Act, Public Law 117–103, div. U, section 102(a)(1).