Fallback Contract Language

When the ARRC was reconstituted in 2018, a broader range of market participants were added as members of the ARRC and its working groups. Since then, the ARRC has been working to deliver recommendations for addressing risks in cash product contract language in the event LIBOR is no longer usable. As part of those efforts, the ARRC released consultations for public feedback on fallback contract language for several cash products. These consultations outline draft language to be voluntarily incorporated in new contracts that reference USD LIBOR to ensure these contracts will continue to be effective in the event that LIBOR is no longer usable.

After full review of public feedback at the close of the comment period, the ARRC will release final recommendations on fallback language to be incorporated into new USD LIBOR contracts for market participants’ voluntary use. The consultations, comments, and final recommendations, as appropriate, are broken out by cash product below.

ARRC members have also been actively engaged in work led by the International Swaps and Derivatives Association (ISDA) to consider best practices for contract robustness in derivatives contracts. ISDA has outlined a proposed process for making those contracts resilient to the possible permanent cessation of LIBOR or other prominent interbank offered rates and is now focused on the specific implementation details of that process.

Principles for Fallback Contract Language (Released July 9, 2018)

Summary of ARRC's LIBOR Fallback Language (Released November 15, 2019)

Spread Adjustment Methodologies for Fallbacks in Cash Products

Fallback Contract Language and Consultation Materials by Product

Adjustable Rate Mortgages

Bilateral Business Loans

Floating Rate Notes


Syndicated Loans

Variable Rate Private Student Loans