An Overview Of The ISDA IBOR Fallbacks Supplement And Protocol

I.  Introduction

On October 23, 2020, the International Swaps and Derivatives Association, Inc. ("ISDA") published (1) the ISDA 2020 IBOR Fallbacks Protocol (the "Protocol") and (2) a supplement to the 2006 ISDA Definitions that adds new IBOR Fallbacks (the "Supplement"). The Protocol and the Supplement are scheduled to become effective on January 25, 2021.¹ Collectively, the two publications represent a very significant step in the move away from the use of LIBOR and other benchmarks.

The Supplement amends the definitions applicable to various interbank offered rates ("IBORs") under the 2006 ISDA Definitions so that new transactions that incorporate those definitions will "fall back" to alternative reference rates upon the occurrence of specified events. The Protocol is a multilateral contractual amendment that amends existing contracts referencing IBORs to provide for fallbacks that generally track the Supplement.