§5802 — Title 12 Banks and Banking | U.S. Code

Summary

Names and explains the key words used when contracts move from LIBOR to a replacement rate called SOFR. Benchmark is an index of interest or dividend rates used as a reference to calculate values or payments. Benchmark administrator is a person who publishes a benchmark for others to use. Benchmark replacement is a rate or benchmark used to replace LIBOR-based rates in a contract. Benchmark replacement conforming changes are technical or operational fixes the Board thinks are needed, or that a calculating person reasonably thinks are needed for non‑consumer loans, to make the Board’s chosen replacement work in contracts. Board is the Board of Governors of the Federal Reserve System. Board-selected benchmark replacement is the replacement the Board picks that is based on SOFR, including any tenor spread adjustment under section 5803(e). Calculating person is anyone who must calculate a value or payment tied to a benchmark in a LIBOR contract. Consumer and credit have the meanings given in 15 U.S.C. 1602. Consumer loan means a consumer credit transaction. Determining person is anyone who has authority to pick a benchmark replacement for a LIBOR contract, even temporarily. Fallback provisions are contract terms that say how to pick a replacement benchmark and when it starts. IBOR covers LIBOR and other interbank offered rates expected to stop. IBOR benchmark replacement is a rate to replace any IBOR-based rate in a contract. IBOR contract and LIBOR contract mean any contract or security that uses an IBOR or LIBOR as its benchmark. LIBOR means the overnight and 1-, 3-, 6-, and 12‑month U.S. dollar LIBOR run by ICE Benchmark Administration (it does not include the 1‑week or 2‑month tenors). LIBOR replacement date is the first London banking day after June 30, 2023, unless the Board sets a different date. Security has the meaning given in 15 U.S.C. 77b(a). SOFR is the Secured Overnight Financing Rate published by the Federal Reserve Bank of New York (or a successor). Tenor spread adjustment is 0.00644 percent for overnight LIBOR; 0.11448 percent for 1‑month LIBOR; 0.26161 percent for 3‑month LIBOR; 0.42826 percent for 6‑month LIBOR; and 0.71513 percent for 12‑month LIBOR.

Title 12, §5802

Banks and Banking — Source: USLM XML via OLRC

In this chapter:

(1)The term “benchmark” means an index of interest rates or dividend rates that is used, in whole or in part, as the basis of or as a reference for calculating or determining any valuation, payment, or other measurement.

(2)The term “benchmark administrator” means a person that publishes a benchmark for use by third parties.

(3)The term “benchmark replacement” means a benchmark, or an interest rate or dividend rate (which may or may not be based in whole or in part on a prior setting of LIBOR), to replace LIBOR or any interest rate or dividend rate based on LIBOR, whether on a temporary, permanent, or indefinite basis, under or with respect to a LIBOR contract.

(4)The term “benchmark replacement conforming changes” means any technical, administrative, or operational changes, alterations, or modifications that—

(A)the Board determines, in its discretion, would address 1 or more issues affecting the implementation, administration, and calculation of the Board-selected benchmark replacement in LIBOR contracts; or

(B)solely with respect to a LIBOR contract that is not a consumer loan, in the reasonable judgment of a calculating person, are otherwise necessary or appropriate to permit the implementation, administration, and calculation of the Board-selected benchmark replacement under or with respect to a LIBOR contract after giving due consideration to any benchmark replacement conforming changes under subparagraph (A).

(5)The term “Board” means the Board of Governors of the Federal Reserve System.

(6)The term “Board-selected benchmark replacement” means a benchmark replacement identified by the Board that is based on SOFR, including any tenor spread adjustment pursuant to section 5803(e) of this title.

(7)The term “calculating person” means, with respect to any LIBOR contract, any person, including the determining person, responsible for calculating or determining any valuation, payment, or other measurement based on a benchmark.

(8)The terms “consumer” and “credit” have the meanings given the terms in section 1602 of title 15.

(9)The term “consumer loan” means a consumer credit transaction.

(10)The term “determining person” means, with respect to any LIBOR contract, any person with the authority, right, or obligation, including on a temporary basis (as identified by the LIBOR contract or by the governing law of the LIBOR contract, as appropriate) to determine a benchmark replacement.

(11)The term “fallback provisions” means terms in a LIBOR contract for determining a benchmark replacement, including any terms relating to the date on which the benchmark replacement becomes effective.

(12)The term “IBOR” means LIBOR, any tenor of non-U.S. dollar currency rates formerly known as the London interbank offered rate as administered by ICE Benchmark Administration Limited (or any predecessor or successor administrator thereof), and any other interbank offered rates that are expected to cease.

(13)The term “IBOR benchmark replacement” means a benchmark, or an interest rate or dividend rate (which may or may not be based in whole or in part on a prior setting of an IBOR), to replace an IBOR or any interest rate or dividend rate based on an IBOR, whether on a temporary, permanent, or indefinite basis, under or with respect to an IBOR contract.

(14)The term “IBOR contract” means any contract, agreement, indenture, organizational document, guarantee, mortgage, deed of trust, lease, security (whether representing debt or equity, including any interest in a corporation, a partnership, or a limited liability company), instrument, or other obligation or asset that, by its terms, continues in any way to use an IBOR as a benchmark.

(15)The term “LIBOR”—

(A)means the overnight and 1-, 3-, 6-, and 12-month tenors of U.S. dollar LIBOR (formerly known as the London interbank offered rate) as administered by ICE Benchmark Administration Limited (or any predecessor or successor administrator thereof); and

(B)does not include the 1-week or 2-month tenors of U.S. dollar LIBOR.

(16)The term “LIBOR contract” means any contract, agreement, indenture, organizational document, guarantee, mortgage, deed of trust, lease, security (whether representing debt or equity, including any interest in a corporation, a partnership, or a limited liability company), instrument, or other obligation or asset that, by its terms, uses LIBOR as a benchmark.

(17)The term “LIBOR replacement date” means the first London banking day after June 30, 2023, unless the Board determines that any LIBOR tenor will cease to be published or cease to be representative on a different date.

(18)The term “security” has the meaning given the term in section 77b(a) of title 15.

(19)The term “SOFR” means the Secured Overnight Financing Rate published by the Federal Reserve Bank of New York (or a successor administrator).

(20)The term “tenor spread adjustment” means—

(A)0.00644 percent for overnight LIBOR;

(B)0.11448 percent for 1-month LIBOR;

(D)0.42826 percent for 6-month LIBOR; and

(E)0.71513 percent for 12-month LIBOR.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This chapter, referred to in text, was in the original “this division”, meaning div. U of Pub. L. 117–103, Mar. 15, 2022, 136 Stat. 825, known as the Adjustable Interest Rate (LIBOR) Act, which is classified principally to this chapter. For complete classification of div. U to the Code, see

Short Title

note set out under section 5801 of this title and Tables.

§5802 Definitions