ISDA today published a statement from its Board of Directors on the forthcoming launch of the IBOR Fallbacks Supplement and IBOR Fallbacks Protocol.
ISDA today published a statement from its Board of Directors on the
forthcoming launch of the IBOR Fallbacks Supplement and IBOR Fallbacks
Protocol.
“On October 1, 2020, ISDA received a business review letter
from the US Department of Justice (DoJ) regarding the new fallbacks it
plans to implement in its standard documentation for derivatives. The
letter states that “the Department has concluded that ISDA’s proposal is
unlikely to produce anticompetitive effects, and ISDA’s proposal has
the potential to offer substantial benefits to the financial services
industry. Accordingly, the Department has no present intention to
challenge ISDA’s proposal to amend its standard documentation”.
“Most other competition authorities do not have a formal process
equivalent to the US business review letter. However, ISDA has kept the
Australian Competition and Consumer Commission (ACCC), the Canadian
Competition Bureau (CCB), the European Commission Directorate-General
for Competition (DG Comp) and certain other competition authorities
fully informed of the issues covered in the DoJ letter. ISDA does not
anticipate adverse action by these authorities with respect to its
implementation of new fallbacks in ISDA’s standard documentation for
derivatives.
“As a result of the work described above, ISDA will launch the IBOR
Fallbacks Supplement to the 2006 ISDA Definitions and the ISDA 2020 IBOR
Fallbacks Protocol on October 23, 2020. The supplement and the
amendments made by the protocol will take effect on January 25, 2021. On
this date, all new derivatives contracts that incorporate the 2006 ISDA
Definitions and reference one of the covered IBORs will contain the new
fallbacks. Derivatives contracts existing as of this date will
incorporate the new fallbacks if both counterparties have adhered to the
protocol or otherwise bilaterally agreed to include the new fallbacks
in their contracts. The protocol will remain open for adherence after
this effective date.”
Background information on the new derivatives fallbacks is available here.
© ISDA - International Swaps and Derivatives Association
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