LIBOR transition The Financial Stability Board (“FSB”) and the Financial Stability Oversight Council (“FSOC”) have observed that the secular decline in interbank short-term funding poses structural risks for unsecured benchmark interest rates such as Interbank Offered Rates (“IBORs”), and therefore regulators and market participants in various jurisdictions have been working to identify alternative reference rates that are compliant with the International Organization of Securities Commission’s standards for transaction-based benchmarks. In the U.S., the Alternative Reference Rates Committee (the “ARRC”), a group of market and official sector participants, identified the Secured Overnight Financing Rate (“SOFR”) as its recommended alternative benchmark rate. Other alternative reference rates have been recommended in other jurisdictions. IBORs are referenced in approximately $370 trillion of wholesale and consumer transactions globally spanning a broad range of financial products and contracts. Without advance transition planning for alternative benchmarks, sudden cessation of those broadly referenced rates could cause significant disruptions to gross flows of floating-rate payments and receipts. An abrupt cessation could also impair the normal functioning of a variety of markets, including commercial and consumer lending. JPMorgan Chase established a Firmwide LIBOR Transition program in early 2018. The Firmwide CFO and the CEO of the CIB oversee the program as senior sponsors. When assessing risks associated with IBOR transition, the program considers three possible scenarios: disorderly transition, measured/regulated transition, and IBOR in continuity. These risks will continue to be monitored, along with any new risks that emerge as the program progresses. Plans to mitigate the risks associated with IBOR transition have been identified, with some already in the early stages of implementation. Model risk, for example, will be mitigated by the identification and migration of swap curves based on IBORs to new alternative reference rates. Market participants are working closely with public sector representation as part of National Working Groups (“NWGs”) towards the common goal of facilitating an orderly transition from IBORs. Current NWG efforts include the development of cash and derivative markets referencing alternative reference rates, as well as the development of industry consensus for fallback language that would determine the rates to use in various IBOR-indexed contracts when a particular IBOR ceases to be produced. The Firm is encouraging its clients to actively participate in industry consultations on fallback language in order to ensure the broadest possible industry engagement in and understanding of IBOR transition. The Firm continues to monitor the transition by clients from the current IBOR- referencing products to products referencing the new alternative reference rates. NWGs are also working with accounting standard setters to manage the accounting implications of amending existing contracts to add fallback language and to change reference rates. Current efforts include the identification of potential accounting impacts and potential alternatives to mitigate those impacts through interpretation of existing accounting rules, or through transition relief from FASB and IASB standard setting. The Firm continues to develop and implement plans to appropriately mitigate the risks associated with IBOR discontinuation as identified alternative reference rates develop, and liquidity in the markets referencing them increases. The Firm will continue to engage with regulators as the transition progresses. 47 JPMorgan Chase & Co./2018 Form 10-K