The Federal Reserve issued "Supervision FAQs on the Transition away from LIBOR." The FAQs follow on previously issued regulatory guidance from October 2021 and November 2020.

Among other things, the FAQs include statements as to what constitutes a "new contract" for purposes of the previously issued guidance, particularly for (1) modifications to adjustable-rate mortgages; (2) loans that "automatically renew" after 2021; and (3) physical settlement of pre-2022 contracts (e.g., swaptions).

The FAQs also provide responses on the ability of firms to engage in secondary market trading of LIBOR-linked instruments issued before 2022, the need for fallback language in contracts entered into before 2022, and the approach by examiners in assessing firms' LIBOR transition actions.


The guidance should be closely reviewed by all market participants. (While it applies directly only to Fed-supervised institutions, regulators across the globe have been fairly consistent in their approach to LIBOR transition.) Certain aspects of the FAQs raise additional questions. Among other things, given the varieties of ways in which contracts may provide for "renewal," the FAQ on "automatic renewal" may require additional consideration.

Primary Sources

  1. SR 21-12: Answers to Frequently Asked Questions on the Transition Away from London Interbank Offered Rate (LIBOR), Attachment B

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