ALTERNATIVE REFERENCE RATES COMMITTEEMay 21, 2021
ARRC Releases Update on its RFP Process for Selecting a Forward-Looking SOFR Term Rate
Administrator
The Alternative Reference Rates Committee (ARRC) announced it selected CME Group as the administrator
that it plans to recommend for a forward-looking Secured Overnight Financing Rate (SOFR) term rate, once
market indicators for the term rate are met.
“The identification of CME Group as the strongest proposal to administer SOFR term rates leaves one final
step in this work, the ARRC’s recommendation of a forward-looking SOFR term rate. Given that continued
progress in developing SOFR derivatives market liquidity is readily achievable, a recommended term rate is
now in clear sight,” said Tom Wipf, ARRC Chairman and Vice Chairman of Institutional Securities at Morgan
Stanley. “Today’s announcement should allow market participants to plan ahead for the recommendation ofCME Group as the term rate administrator soon.”
The ARRC identified CME Group’s submission as the strongest proposal after a thorough evaluation of theRFP responses. The ARRC evaluated proposals based on four specific criteria: technical criteria, firm criteria,
public policy criteria, and calculation methodology criteria. The ARRC has conclusively identified CME Group’s
proposal as having most effectively met those criteria.
“We are pleased to be selected by the ARRC to play this important role in delivering robust and sustainable,
forward-looking SOFR term rates to the industry based on our deep and liquid underlying CME SOFR futures
market,” said Sean Tully, CME Group Global Head of Financial and OTC Products. “We have long been alignedwith the ARRC, and look forward to working with the ARRC and market participants to reach the marketindicators the ARRC has set out for the recommendation of a SOFR term rate. We believe the ARRC’s decision
to select CME Group as the administrator of term SOFR reference rates will provide the market with thecertainty it needs to further grow SOFR issuance and swap market activity.”
Today’s announcement builds on the ARRC’s term rate principles and term rate market indicators—which
together provide clear guidance that would allow the ARRC to recommend a SOFR-based term rate relativelysoon. The ARRC recommended term rate is referenced directly in the ARRC fallback contract language and in
the New York State Legislation. In conjunction with its work towards a final recommendation of a SOFR termrate, the ARRC also plans to recommend best practices for the use of the term rate, including for example asa fallback rate for legacy cash products referencing LIBOR and in new loans where the borrowers otherwise
have difficulty in adapting to the new environment.

ALTERNATIVE REFERENCE RATES COMMITTEE

About the ARRC
The ARRC is a group of private-market participants convened by the Federal Reserve Board and Federal
Reserve Bank of New York in cooperation with the Consumer Financial Protection Bureau, the Federal
Deposit Insurance Corporation, the Federal Housing Finance Agency, the Office of Financial Research, theOffice of the Comptroller of the Currency, the Commodity Futures Trading Commission, the Securities andExchange Commission and the U.S. Treasury Department. It was initially convened in 2014 to identify riskfree alternative reference rates for USD LIBOR, identify best practices for contract robustness, and create animplementation plan with metrics of success and a timeline to support an orderly adoption. The ARRC
accomplished its first set of objectives and identified SOFR as the rate that represents best practice for use incertain new USD derivatives and other financial contracts. It also published its Paced Transition Plan, withspecific steps and timelines designed to encourage adoption of SOFR. The ARRC was reconstituted in 2018with an expanded membership to help to ensure the successful implementation of the Paced Transition Plan,address the increased risk that LIBOR may not exist beyond 2021, and serve as a forum to coordinate andtrack planning across cash and derivatives products and market participants currently using USD LIBOR.
Sign up here to receive email updates about the ARRC.
Contact for ARRC Chair Tom Wipf
Paige Mandy
Morgan Stanley
Contact for the ARRC’s Outreach/Communications Working Group
Andrew S. Gray
JPMorgan Chase
Contact for the Federal Reserve Board
Darren GershContact for the Federal Reserve Bank of New York
Betsy Bourassa
Contact for CME Group
Chris Grams