Tag Archives: ISDA

LIBOR Transition: The Protocol is Coming! The Supplement is Coming!

As we noted in our prior blog post over the summer, the IBOR Fallbacks Protocol and the IBOR Fallbacks Supplement for interest rate derivatives to be published by the International Swaps and Derivatives Association (ISDA) has been on hold while ISDA waits for a positive business review letter from the US Department of Justice (DOJ). This past Friday, ISDA issued a press release that it received the letter from the DOJ on October 1, 2020.

The DOJ letter does not foreclose the possibility that other regulators in Australia, Canada, the European Union and other jurisdictions may raise their own objections. However, the Board of Directors of ISDA has determined that it will release the Supplement and Protocol on Friday, October 23, 2020, and the Supplement and Protocol will take effect approximately three months later on Monday, January 25, 2021. The draft Supplement and draft Protocol have been posted for review, together with a FAQ,  sample adoption amendments and descriptive outline.

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A Hot Issue for a Hot Summer: Time to Understand ISDA IBOR Benchmark Fallbacks

As we patiently wait for the International Swaps and Derivatives Association (ISDA) to publish its long planned IBOR Fallback Protocol and IBOR Fallback Supplement for interest rate derivatives, we thought we would highlight some recent announcements on the topic.

According to ISDA’s letter on July 22, 2020 to the Alternative Reference Rates Committee (ARRC), ISDA planned to finalize the Protocol and the Supplement by the end of July.  On July 29, 2020, ISDA announced that it would publish the Protocol “soon”.  This is hardly the first time that things have been delayed, but it’s important to get it right.  Among other things, it’s possible that ISDA is still waiting for a positive business review letter from the US Department of Justice and similar feedback from competition authorities in other jurisdictions.

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ARRC Pumps Up the Summer Heat on LIBOR Transition

While the COVID-19 pandemic has taken center stage the past few months, the transition away from LIBOR has been continuing in the background, almost unnoticed at times.   Some market participants have questioned whether the disruption caused by COVID-19 will delay the LIBOR transition process.  The proposed timelines have stretched a bit, but regulatory authorities have been adamant that the December 31, 2021 deadline remains firm.

Earlier this month, the Alternative Reference Rates Committee of the New York Federal Reserve (ARRC) began a full court press to make the case for transitioning to SOFR and guide market participants to that goal.  Tom Wipf, the chair of the ARRC, spoke at webinars hosted by the Loan Syndications & Trading Association (LSTA) and the International Swaps and Derivatives Association (ISDA).  The ARRC also kicked off a SOFR Summer Series of webinars open to the public.  The speakers include many top officials and industry leaders, and their insight is invaluable.  There are also lively questions and answers from the moderator and the internet audience.

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