The Alternative Reference Rates Committee (the "ARRC"), a group convened by the Federal Reserve Board and Federal Reserve Bank of New York, provided a "detailed practical implementation checklist" to be used by buy-side firms transitioning from LIBOR to a Secured Financial Overnight Financing Rate ("SOFR"). Specifically, the ARRC recommends:
- establishing a robust governance framework to oversee the implementation of a firm's "enterprise-wide" LIBOR transition program;
- developing an enterprise-wide program that will mitigate risks associated with the transition and be designed specifically to meet each firm's needs;
- implementing an enterprise-wide strategy that will increase levels of education for impacted stakeholders;
- identifying and validating LIBOR-linked assets and exposures;
- understanding and assessing the impacts of transitioning from LIBOR, in addition to implementing fallback provisions;
- creating a strategy for redesigning or transitioning the current portfolio of LIBOR products, with consideration of the new usage of products based on SOFR;
- maintaining procedural and oversight routines to manage both financial and non-financial routines;
- addressing the implications resulting from the LIBOR transition with operational and technology readiness plans; and
- determining (i) accounting and reporting considerations and (ii) tax and regulatory considerations.
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