Associate Director Timothy McKenna has published an article titled “Challenges of Transitioning Away from IBORs” in Law360. In this piece, Mr. McKenna considers some of the difficulties associated with discontinuing the use of interbank offered rates (IBORs) as benchmarks for large-scale financial transactions. While many benchmark rates have been proposed, the majority are market-based, making them more accurate with regard to the overall market but also more volatile by necessity. Mr. McKenna discusses how the United States’ current benchmark, USD LIBOR, differs from its likely replacement, SOFR; how the end of IBORs will impact hedge accounting; and instrument-specific issues that will emerge with the transition. 

The author would like to thank John Madsen for his contributions to this article, and Dr. Airat Chanyshev for his comments and suggestions.