The Alternative Reference Rates Committee (“ARRC”) has published a Buy-Side/Asset Owner Checklist (the “Buy-Side Checklist”) that is intended to assist asset managers and asset owners transition from U.S. Dollar (USD) LIBOR to the Secured Overnight Financing Rate (“SOFR”).

The Buy-Side Checklist establishes goals and concrete implementation steps for 10 “work categories”.  This blog post will provide asset management firms with an overview of this checklist. Attached to this post is a A Summary of The ARRC’s Buy-Side Checklist.  

Background: The ARRC

The ARRC was convened by the Federal Reserve Board and the Federal Reserve Bank of New York  in cooperation with several U.S. agencies in order to facilitate the transition from USD LIBOR to SOFR, since LIBOR is expected to become unusable by the end of 2021.  To that end, the ARRC has developed what it refers to as a Paced Transition Plan and other key milestones (available here).

The ARRC’s members represent a wide array of market participants (i.e., banks, asset management firms, insurance companies, and several trade associations), while federal financial regulators are ex officio members of the ARRC.  The complete membership of the ARRC list is available here.

The Buy-Side Checklist: What it Is and Why It May Be of Interest to Asset Management Firms

In late January 2020, the ARRC published the Buy-Side Checklist (available here) in order to assist asset management firms with the transition from USD LIBOR to SOFR.  The Buy-Side Checklist establishes goals and concrete implementation steps for 10 “work categories”.  Attached to this post is A Summary of The ARRC’s Buy-Side Checklist.  

In our experience, the level of attention given to LIBOR-transition planning varies greatly among different buy-side participants, although one common frustration voiced by firms engaged in this planning process has been the absence of practical guidelines and market information to assist with transition planning.  We expect that the Buy-Side Checklist will partially fill this gap, particularly in so far as it will offer a benchmark against which a buy-side firm can assess its own LIBOR transition planning processes and initiative.

The ARRC Vendor Survey: Self-Assessment Tool for Service Provider Readiness

As a related item, concurrent with the publication of the Buy-Side Checklist, the ARRC published a survey that it describes as a “a self-assessment tool for software and technology vendors to assess their own readiness” for the transition from LIBOR to SOFR.   We believe that the survey results will be of interest to many asset management firms, since “vendor readiness” has been somewhat of an unknown and a “missing link” for asset managers that have started into the transition planning process.

Survey responses will be due from the vendors by March 16th, which suggests that mid to late Q2 2020 will be a time when asset management firms may have greater clarity with respect to the development of even more granular and concrete steps for their LIBOR transition plans and timelines.  The ARRC vendor survey and related additional information about that survey is available here.

Additional Questions: Perkins Coie’s LIBOR Task Force

If you have additional questions about your firm’s LIBOR transition planning, please contact the author of this blog post or the Perkins Coie attorney with whom you regularly work.

Also, we encourage you to learn more about Perkins Coie’s LIBOR Task Force, a team of experienced professionals who are assisting asset management firms, banks and a variety of other market participants that will be affected by the expected phaseout of LIBOR on December 31, 2021.

Good day.  Good to start planning since the end of 2021 is not too far away. DR2