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In newly released results of ISDA's supplemental consultation on fallback triggers for derivatives transactions that reference LIBOR (the "Supplemental Pre-cessation Consultation"), ISDA reported that the vast majority of respondents are in favor of including a pre-cessation trigger in ISDA's amendments to the 2006 ISDA definitions and the related ISDA protocol. (See previous coverage.)
ISDA noted that respondents wanted to ensure consistency across both cash and derivatives products, and cleared and OTC derivatives. ISDA stated that the final results satisfied all of the criteria for determining whether the responses to the Supplemental Pre-cessation Consultation are sufficient to prompt ISDA to include pre-cessation fallback triggers in ISDA's amendments to the 2006 ISDA definitions and the related ISDA protocol, and that ISDA intends to proceed on such basis.
Commentary
An interesting finding from the results of the Supplemental Pre-cessation Consultation is that even market participants that are opposed to the inclusion of pre-cessation fallback triggers are motivated by a concern for ensuring consistency across markets or products. It appears that one of the main factors that causes market participants to deviate in their response to the Supplemental Pre-cessation Consultation is the consideration of the markets across which they wish to ensure consistency.
Originally published 15 May 2020
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