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 each comment period, the ARRC released 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 were also actively engaged in work led by the International Swaps and Derivatives Association (ISDA) to consider best practices for contract robustness in derivatives contracts. In early 2021, ISDA’s IBOR Fallbacks Protocol and IBOR Fallbacks Supplement took effect. Together, they focus on strengthening existing and new derivatives contracts with durable fallback language.

ARRC Statement on Recommended Fallbacks for Implementation of its Hardwired Fallback Language (Released March 15, 2023)

Summary of Spread-Adjusted Fallback Recommendations (Released October 6, 2021)

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

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

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