Libor SOFRThe NeuGroup Insights Interview

Next Steps on the Road to Libor’s End: ARRC Chair Tom Wipf Looks Ahead

By August 12, 2021No Comments

In part two of his video interview with Joseph Neu, Tom Wipf discusses operational challenges, SOFR’s strengths and more.

Keeping track of developments in the long-running financial market drama called the Libor transition has been anything but easy.

  • The number of complex issues at play can be overwhelming—everything from fallback language, interest calculations and credit spread adjustments to term rates, timelines and deadlines.

That’s one reason NeuGroup created a Libor transition working group and has facilitated scores of discussions on the ins and outs of the Secured Overnight Financing Rate (SOFR), the replacement interest rate endorsed by the Alternative Reference Rates Committee (ARRC).

  • Just this week, the ARRC welcomed Refinitiv’s prototype publication launch of the ARRC’s recommended spread adjustments and spread adjusted rates for cash products.
  • In late July, the ARRC recommended CME Group’s forward-looking SOFR term rates—an important development for many NeuGroup members that will be discussed at numerous peer group meetings this fall.

NeuGroup’s goal is to help members negotiate the transition away from Libor and make sure their voices are being heard by regulators, the ARRC and others overseeing this monumental change.  

  • To do that, we’ve kept in close touch with the ARRC and its chairman Tom Wipf, who is also a vice chairman at Morgan Stanley.
  • Last week, NeuGroup founder and CEO Joseph Neu sat down with Mr. Wipf to discuss what he’s learned over the last seven years (he joined the ARRC in 2014 and became chair in 2019) and what remains to be done.
  • You can watch the initial segment of the interview here.

In the second part of the discussion, below, Mr. Wipf addresses some of the operational issues presented by SOFR that the ARRC had to confront as it got feedback from nonfinancial corporates and other market participants.

  • And a word to the wise: At the end of the video, Mr. Wipf notes that no new financial contracts can use Libor after the end of 2021, “150-some-odd days away.” Well, a week has passed and it’s now about 140 days away!
Justin Jones

Author Justin Jones

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