Beyond LIBOR, administrators for certain other benchmark rates have ceased or modified, or have announced their intention to cease or modify, such benchmark rates. For example, the administrator of the Canadian Dollar Offered Rate (CDOR) has indicated that publication of all tenors of CDOR will permanently cease following June 28, 2024. Further, similar announcements on other benchmark rates could be made in the future.
In addition, similar to what was done during LIBOR transition efforts, there is now a practice of issuing so-called “stop-sell” guidance after a specified date (e.g., an expectation on the part of an applicable regulator that its regulated entities will cease new use of that benchmark) to promote a smooth transition away from a benchmark prior to its cessation.
For financial products referencing benchmarks that are ceasing or otherwise changing, the impact can vary across different types of products, and even between transactions in the same type of product. Additionally, affected benchmarks may be discontinued on differing schedules.
Some financial products that may be impacted by benchmark reform include:
- OTC Derivatives
- Exchange-Traded Derivatives
- Floating Rate Notes (FRNs)
This list is indicative and not fully exhaustive. Other financial products may also be affected indirectly due to changes in discounting curves or pricing.
Bank of America continues to identify, assess, and monitor risks associated with the discontinuation or unavailability of other non-LIBOR benchmarks and the transition to ARRs. We continue to evaluate existing contracts across all products to determine the impact of the discontinuation of benchmarks and to assess and implement changes to those contracts.
Bank of America is committed to working closely with our clients to promote awareness of changes to benchmarks, take into consideration client concerns, support markets, and provide solutions to our clients. Bank of America is also committed to participating in the work of global regulators, industry working groups, and trade associations aimed at supporting a smooth transition away from impacted benchmarks to ARRs.
It is important that clients review and understand the governing terms of their financial products. Clients should analyze the effect of cessation or other modifications impacting benchmark rates. For further guidance, please consult with your legal, tax, financial and other professional advisors.