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ARTICLE · 19 MARCH 2020

ISDA Issues Consultation On Pre-Cessation Fallback Provisions To Facilitate LIBOR Transitioning

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On February 25, 2020, the International Swaps and Derivatives Association (ISDA) launched a new consultation on how to implement pre-cessation fallback language into derivatives agreements.

United StatesFinance and Banking
Donna Parisi
Donna Parisi
Geoffrey Goldman
Geoffrey Goldman
Azam Aziz
Azam Aziz
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On February 25, 2020, the International Swaps and Derivatives Association (ISDA) launched a new consultation on how to implement pre-cessation fallback language into derivatives agreements.1 Responses are due by no later than March 25th. The consultation’s outcome will be an important step in providing the industry with clarity as the transition away from LIBOR progresses.

Background

ISDA has been exploring pre-cessation fallback provisions since May 2019, when it launched separate consultations for pre-cessation fallbacks and permanent cessation fallbacks.2 ISDA first issued a consultation calling for preferred methods of implementing pre-cessation language into derivatives agreements in response to a letter from the Financial Stability Board Official Sector Steering Group (FSB OSSG) about the potential need for a pre-cessation trigger for fallbacks if LIBOR were deemed by the U.K. Financial Conduct Authority (FCA) to be “no longer capable of

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