(a) General requirement. On and after the LIBOR replacement date, the applicable Board-selected
benchmark replacement shall be the benchmark replacement for the following
LIBOR contracts, except to the extent that an exception in paragraph
(b) of this section applies:
(1) A LIBOR contract with one of the following characteristics as
of the LIBOR replacement date, after giving effect to paragraph (a)(2) of
this section:
(i) The LIBOR contract contains no fallback
provisions;
(ii) The LIBOR contract
contains fallback provisions that identify neither—
(A) A specific benchmark replacement;
nor
(B) A determining person; or
(iii) The LIBOR
contract contains fallback provisions that identify a determining
person, but the determining person has not selected a benchmark replacement
by the earlier of the LIBOR replacement date and the latest date for
selecting a benchmark replacement according to the terms of the LIBOR
contract, for any reason.
(2) For purposes of this part, on the LIBOR replacement date, any
reference in any fallback provisions of a LIBOR contract to the following
shall be disregarded as if not included in the fallback provisions
of such LIBOR contract and shall be deemed null and void and without
any force or effect:
(i) A benchmark replacement that is based in any way on any LIBOR
value, except to account for the difference between LIBOR and the
benchmark replacement; or
(ii)
A requirement that a person (other than a benchmark administrator)
conduct a poll, survey, or inquiries for quotes or information concerning
interbank lending or deposit rates (including, but not limited to,
Eurodollar deposit or lending rates).
(b) Exceptions. Notwithstanding paragraph
(a) of this section, this part shall not apply to—
(1) Any LIBOR contract that the parties
have agreed in writing shall not be subject to the Adjustable Interest
Rate (LIBOR) Act;
(2) Any LIBOR
contract that contains fallback provisions that identify a benchmark
replacement that is not based in any way on any LIBOR value (including
the prime rate or the effective federal funds rate) after application
of paragraph (a)(2) of this section; or
(3) Except as provided in paragraph (a)(2)
or (a)(1)(iii) of this section, any LIBOR contract subject to paragraph
(c) of this section as to which a determining person does not elect
to use a Board-selected benchmark replacement pursuant to paragraph
(c).
(c) Selection of Board-selected
benchmark replacement by determining person. Except for any LIBOR
contract described in paragraph (b)(2) of this section, a determining
person may select the Board-selected benchmark replacement specified
in section 253.4 as the benchmark replacement for a LIBOR contract.
Any such selection shall be—
(1) Irrevocable;
(2) Made by the
earlier of the LIBOR replacement date and the latest date for selecting
a benchmark replacement according to the terms of the LIBOR contract;
and
(3) Used in any determinations
of the benchmark under or with respect to the LIBOR contract occurring
on and after the LIBOR replacement date.
(d) Other provisions of LIBOR contracts unchanged. Except as provided in paragraph (a)(2) of this section and in section
253.5, where the applicable Board-selected benchmark replacement becomes
the benchmark replacement for a LIBOR contract on and after the LIBOR
replacement date pursuant to paragraph (a) or (c) of this section,
all other provisions of such contract shall not be altered or impaired
and shall apply to such contract using the Board-selected benchmark
replacement, including but not limited to:
(1) Any provision specifying the date for
determining a benchmark, except in the case of derivative transactions,
which are subject to section 253.4(a)(2), and Federal Home Loan Bank
advances, which are subject to section 253.4(b)(3)(ii)(B);
(2) Any provision specifying rounding conventions
for a benchmark;
(3) Any provision
referencing LIBOR or any LIBOR value prior to the LIBOR replacement
date (including any provision requiring a person to look back to a
LIBOR value as of a date preceding the LIBOR replacement date);
(4) Any provision applying any cap, floor,
modifier, or spread adjustment to which LIBOR had been subject pursuant
to the terms of a LIBOR contract;
(5) Any provision of federal consumer financial law that—
(i) Requires creditors to notify
borrowers regarding a change-in-terms; or
(ii) Governs the reevaluation of rate
increases on credit card accounts under open-ended (not home-secured)
consumer credit plans; or
(6) Except as provided in 12 U.S.C. 5804(c), the rights or obligations
of any person, or the authorities of any agency, under federal consumer
financial law, as defined in 12 U.S.C. 5481.
