The Alternative Reference Rates Committee in the US has chosen a new chair to lead it through the final stages of the transition away from US dollar Libor.
Peter Phelan, chief administrative officer of the institutional client group in North America at Citigroup, will take the chair. He will succeed Tom Wipf, vice-chair at Morgan Stanley, on July 1.
The ARRC is a group of market participants convened by the Federal Reserve and New York Fed in 2017 to manage the transition from dollar Libor to the Secured Overnight Financing Rate (Sofr).
The transition is days away from completion. Phelan takes the position in its final stages and will be responsible for navigating any final concerns after the final cessation date of dollar Libor on June 30.
As close as it is, the job is far from finished. Ann Marie Bria, executive director of asset services at DTCC, said that with just a few days left before the deadline, firms must remain focused on updating the benchmark rate information on impacted transactions and communicating the fall back rate indexes to appropriate parties.
"DTCC has worked closely with the ARRC and other industry organisations to deliver a centralised process to capture and disseminate standardized benchmark replacement via its LENS service," she said. "LENS holds thousands of submissions, and many still require updating. Firms should update this information as soon as possible.”
Phelan is no stranger to the ARRC, having joined in 2021 to represent Citi. Previous roles include time as deputy assistant secretary for capital markets at the US Treasury, a managing director in CIT Group’s FX team, and at Commerzbank.
End of an era
Wipf has led the Committee since 2019, through the most difficult stages of the transition, including seemingly endless debates over term, credit-sensitive and synthetic rates.
In the US, unlike in other financial centres, there were several competing alternatives to Sofr which supporters felt suited some products better, especially loans.
Wipf played a large part in fending off these advances, and use of alternative rates is reportedly very low.
“It seems like the US market nowadays is full steam ahead towards CME term Sofr as the replacement rate,” said Matthew Haist, counsel in Ashurst’s New York office, referring to the CME Group derivatives exchange, which administers the rate.
“Occasionally, you'll see a deal transitioned to daily simple Sofr or a compounded Sofr mechanic to be more consistent with the European market practice, but I personally have not seen a single loan referencing a credit-sensitive rate.”
Marcus Burnett, chief of the SOFR Academy, an educational platform specialising in the new rate, expressed his appreciation for Wipf's service.
“Tom is highly regarded across the financial services community in the United States and abroad. His deep experience in financial markets and the leadership he brought to the ARRC was instrumental in securing a safe and smooth transition to a SOFR based economy.”
With just a week to go until Libor finally expires, Wipf can take a well deserved step back from the Committee and let Phelan finish the job.
Additional reporting by Alice Tchernookova