ISDA Reports Preliminary Results of Consultation on Pre-Cessation Fallback Triggers
On April 15, 2020, ISDA reported the initial results of its supplemental consultation regarding the implementation of pre-cessation fallback triggers for derivatives transactions that reference LIBOR. ISDA found that a significant majority of respondents are in favor of including a pre-cessation fallback trigger for LIBOR in ISDA's amended LIBOR definitions. On the basis of the initial results, ISDA expects to incorporate a pre-cessation fallback trigger based on a "non-representativeness" determination in its amended definitions to apply to both new and legacy derivatives transactions.
Commentary
The initial results of ISDA's pre-cessation consultation suggest that ISDA's fallback triggers for LIBOR will more closely align with the Alternative Reference Rates Committees-recommended fallback triggers for cash products and the triggers that are expected to be adopted by major central counterparties.