The New Reference Rate Use Committee: Monitoring More Than Problem-Solving

Now that SOFR has replaced Libor, stewardship of the preferred U.S. credit benchmark rate has passed to a new committee led by a senior Morgan Stanley risk executive.

Patrick J. Howard was designated inaugural chair of the Reference Rate Use Committee (RRUC) when the Federal Reserve Bank of New York launched it last fall. Its predecessor, the Alternative Reference Rates Committee (ARRC), was formed in 2014 and had been chaired by Morgan Stanley vice chairman of institutional securities Tom Wipf, who joined UBS in 2023.

The ARRC spent nine years preparing the way for SOFR – the Secured Overnight Financing Rate – as a superior alternative to the London Interbank Offered Rate, which domestic and overseas regulators had deemed unsustainable because of operational weaknesses and susceptibility to manipulation.

Currently listing 20 market-participant members plus ex-officio representatives from the New York Fed and regulatory agencies, the RRUC has a different mandate from that of the ARRC. It has “much more of a watching brief than trying to solve problems or even looking for problems,” Howard, Morgan Stanley deputy chief risk officer,...