On May 16, the International Swaps and Derivatives Association, Inc. (“ISDA”) published two consultations in connection with the potential discontinuation of certain interbank offered rates (“IBORs”), seeking input on (i) the replacement of USD LIBOR, CDOR and HIBOR (the “Second Benchmark Consultation”) and (ii) the preferred approach for addressing pre-cessation issues in derivatives that reference certain IBORs (the “Pre-Cessation Consultation”).  These Consultations follow an earlier consultation published by ISDA in July 2018 (the “First Benchmark Consultation” and, together with the Second Benchmark Consultation and the Pre-Cessation Consultation, the “Consultations”) relating to the potential discontinuation of numerous IBOR benchmark rates. READ MORE
Orrick lawyers authored an article titled “LIBOR . . . Coming to an End?” discussing the transition to the post-LIBOR era, with focus on legacy contracts that reference LIBOR. The article is available here.
On July 12, the International Swaps and Derivatives Association, Inc. (“ISDA”) initiated a market-wide consultation (the “Consultation”) on technical issues related to new benchmark fallbacks for derivatives referencing certain interbank offered rates, or IBORs, in response to the expected discontinuance of the publication of those IBORs at the end of 2021. The purpose of the Consultation is to ease the transition of the derivatives market from referencing existing IBOR rates to alternative risk-free-rates (“RFRs”) that have been identified as part of the global benchmark reforms. These RFRs are intended to be based on robust and highly liquid underlying markets that, unlike the relevant IBORs, do not require and are not based on submissions from panel banks or others.
On July 27, the Chief Executive of the UK Financial Conduct Authority (“FCA”) announced that, after the end of 2021, the FCA would no longer use its power to persuade or compel panel banks to submit rate information used to determine the London Interbank Offered Rate, known as “LIBOR.” LIBOR serves as a benchmark rate for hundreds of trillions of dollars of securities, loans and transactions, including over-the-counter and exchange-traded derivatives. The total market of financial instruments based on LIBOR is approximately $350 trillion. READ MORE