SB 1246 — Benchmark Replacements for the London Interbank Offered Rate

Florida Senate - 2022 CS for SB 1246 By Senatorthe GrutersCommittee 23-01121-22on 20221246__Commerce Aand billTourism; to be entitled An act relating to benchmark replacements for London Interbank Offered Rate;

and Senator Gruters 577-02788-22 20221246c1 A bill to be entitled An act relating to benchmark replacements for the London Interbank Offered Rate;

definingproviding terms;definitions;

requiring that certain fallback provisions in contracts, securities, and instruments providing specified benchmark replacements to be disregarded and void;

requiring that benchmark replacement conforming changes to become an integral part of contracts, securities, and instruments under certain circumstances;

providing requirements for selections or uses of recommended benchmark replacements as benchmark replacements;

PageBe 1It Enacted by the Legislature of 13the CODING:State of Florida:

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Florida Senate - 2022 CS for SB 1246 23-01121-22577-02788-22 20221246__20221246c1 BeSection It1. Enacted by the Legislature of the State of Florida:

Section 1.

(a) “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 a valuation, payment, or other measurement under or with respect Page 2 of 1312 CODING:

Florida Senate - 2022 CS for SB 1246 23-01121-22577-02788-22 20221246__20221246c1 of,to or as a reference for, calculating or determining a valuation, payment, or other measurement under or in respect of a contract, security, or instrument.

(b) “Benchmark replacement” means a benchmark, an interest rate, or a dividend rate that 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 inwith respect ofto a contract, security, or instrument.

(c) “Benchmark replacement conforming change” means, with respect to any type of contract, security, or instrument, a technical, administrative, or operational change, alteration, or modification that is associated with and reasonably necessary to the use, adoption, calculation, or implementation of a recommended benchmark replacement and that meetshas thebeen followingselected conditions:or recommended by a relevant recommending body.

However, if, in the reasonable judgment of a calculating person, the change, alteration, or modification selected or recommended by a relevant recommending body does not apply to the contract, security, or instrument or is insufficient to allow administration and calculation of the recommended benchmark replacement, the benchmark replacement conforming change may include other changes, alterations, or modifications that, in the reasonable judgment of the calculating person:

TheAre change,necessary alteration,to allow administration and calculation of the recommended benchmark replacement under or modificationwith hasrespect beento selectedthe contract, security, or recommendedinstrument byin a relevantmanner recommendingconsistent body.with market practice for substantially similar contracts, securities, or instruments and, to the extent practicable, the manner in which the contract, security, or instrument was administered immediately before the LIBOR replacement date.

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If, in the reasonable judgment of the calculating person, the change, alteration, or modification selected or recommended under subparagraph 1.

does not apply to the contract, security, or instrument or is insufficient to allow administration and calculation of the recommended benchmark replacement, the benchmark replacement conforming change must include other changes, alterations, or modifications that, in the reasonable judgment of the calculating person:

a.

Are necessary to allow administration and calculation of the recommended benchmark replacement under or in respect of the contract, security, or instrument in a manner consistent with Page 3 of 13 CODING:

Florida Senate - 2022 SBCS 1246 23-01121-22 20221246__ market practice for substantiallySB similar1246 contracts,577-02788-22 securities,20221246c1 or2. instruments and, to the extent practicable, the manner in which the contract, security, or instrument was administered immediately before the LIBOR replacement date;

and b.

(g) “Fallback provision” means a term in a contract, security, or instrument which sets forth a methodology or procedure for determining a benchmark replacement, including any term relating to the date on which the benchmark replacement Page 4 of 1312 CODING:

Florida Senate - 2022 SBCS 1246 23-01121-22 20221246__ (g) “Fallback provision” means a term in a contract, security, or instrument which sets forth a methodology or procedure for determiningSB a1246 benchmark577-02788-22 replacement,20221246c1 including any term relating to the date on which the benchmark replacement becomes effective, without regard to whether a benchmark replacement can be determined in accordance with the methodology or procedure.

A public statement or publication of information by the regulatory supervisor for the administrator of LIBOR, the Federal Reserve System, an insolvency official with jurisdiction over the administrator of LIBOR, a resolution authority with jurisdiction over the administrator of LIBOR, or a court or an entity with similar insolvency or resolution authority over the administrator of LIBOR, announcing that the administrator of PageLIBOR 5has ceased or will cease to provide LIBOR permanently or indefinitely, if, at the time of 13the CODING:statement or publication, there is no successor administrator that will continue to provide LIBOR.

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Florida Senate - 2022 CS for SB 1246 23-01121-22577-02788-22 20221246__20221246c1 LIBORc. has ceased or will cease to provide LIBOR permanently or indefinitely, if, at the time of the statement or publication, there is no successor administrator that will continue to provide LIBOR.

c.

In the case of a LIBOR discontinuance event described in sub-subparagraph (i)1.c., the date of the public statement or Pagepublication 6 of 13information CODING:referenced in sub-subparagraph (i)1.c.

2.

A date that affects one or more tenors of LIBOR does not constitute a LIBOR replacement date with respect to a contract, Page 6 of 12 CODING:

Florida Senate - 2022 CS for SB 1246 23-01121-22577-02788-22 20221246__20221246c1 publicationsecurity, ofor informationinstrument referencedthat: in sub-subparagraph (i)1.c.

2.

A date that affects one or more tenors of LIBOR does not constitute a LIBOR replacement date with respect to a contract, security, or instrument that:

(m) “Relevant recommending body” means the Federal Reserve Board, the Federal Reserve Bank of New York, the Alternative PageReference 7Rates ofCommittee, 13or CODING:a successor to any of them.

(n) “SOFR” means, with respect to any day, the secured overnight financing rate published for the day by the Federal Reserve Bank of New York as the administrator of the benchmark, Page 7 of 12 CODING:

Florida Senate - 2022 CS for SB 1246 23-01121-22577-02788-22 20221246__20221246c1 Reference Rates Committee, or a successor toadministrator, anyon the Federal Reserve Bank of them.New York’s website.

(n) “SOFR” means, with respect to any day, the secured overnight financing rate published for the day by the Federal Reserve Bank of New York as the administrator of the benchmark, or a successor administrator, on the Federal Reserve Bank of New York’s website.

Made by the earlier of the LIBOR replacement date or the latest date for selecting a benchmark replacement according to Pagethe 8contract, ofsecurity, 13or CODING:instrument;