Pre-Cessation Triggers

On October 23, 2020, ISDA published its long-awaited IBOR Fallbacks Supplement to the 2006 ISDA Definitions (the Supplement) and Protocol. The publication is a result of years of consultations with regulators and market participants and seeks to provide a solution for the trillions of dollars of IBOR-referencing derivatives contracts.  The Supplement and Protocol provide a standardised and efficient means of transitioning derivatives contracts currently referencing IBORs to risk-free rates.  At present, uptake and market acceptance of these changes has been resounding, as over 700 parties have adhered to the Protocol less than four weeks after its launch.
Continue Reading “Leave the World Behind” ─ ISDA Publishes 2020 IBOR Fallbacks Supplement and Protocol

Following the selection of alternative risk-free rates (RFRs) to replace each of the five LIBOR currencies: SOFR (for USD LIBOR), SONIA (for GBP LIBOR), SARON (for CHF LIBOR), TONAR (for JPY LIBOR) and €STR (for Euro LIBOR), ISDA launched consultations to obtain input from market participants on how to address the adjustments required as a

In a letter to the International Swaps and Derivatives Association (ISDA) on January 20, 2020, the Financial Conduct Authority (FCA) confirmed the possibility that LIBOR may continue to be published for a short period after regulators have announced that it is no longer representative of an underlying market (a non-representative LIBOR). The European Benchmarks Regulation could prohibit EU-supervised firms from entering into new derivatives transactions referencing such a non-representative LIBOR. As a result, the FCA encouraged ISDA to provide the derivatives market with the ability to insert triggers into their derivatives contracts to allow fallbacks to risk-free rates if such a regulatory announcement is made prior to the cessation of LIBOR (a pre-cessation trigger).
Continue Reading ISDA to Revisit LIBOR Pre-Cessation Triggers