Singapore/Hong Kong, 9 December 2021 – ISDA (International Swaps and Derivatives Association) was awarded Best Solution in LIBOR Transition in the 4th Regulation Asia Awards for Excellence 2021 at an online ceremony on 9 December 2021.
ISDA has been working to support a smooth LIBOR transition, initiating multiple consultations since 2016 to establish a global consensus on the fallback methodology that would apply to derivatives referencing key IBORs. ISDA’s work has included collaboration with regulators, market infrastructure institutions, industry bodies and other market participants across jurisdictions – including on RFR (risk-free-rate) development, IBOR fallback documentation, and market engagement and awareness-building activities.
The ISDA IBOR Fallbacks Protocol, which came into effect on 25 January 2021, enables market participants to incorporate robust fallback provisions into their legacy non-cleared derivatives trades with other counterparties in an efficient and effective way, ensuring a viable safety net and significantly mitigating systemic risk that may have otherwise occurred without such arrangements in place.
Since the protocol was published, it has gained widespread acceptance, with more than 14,900 parties across 90 jurisdictions having adhered to the protocol. As a result of the UK FCA’s (Financial Conduct Authority) announcement on 5 March 2021, the fallbacks – which are adjusted versions of the RFRs identified in each currency – will automatically apply for all non-USD LIBOR currencies after the end of 2021 and for five remaining USD LIBOR settings in the middle of 2023.
“More than 90 percent of the USD 260 trillion in derivative contracts that reference LIBOR are covered by the ISDA fallbacks, which means a huge systemic risk has been remediated from a legal perspective,” said one judge on the awards panel. “The protocol has provided an efficient way of implementing industry standard contractual changes to legacy trades with a large number of counterparties.”
The ISDA IBOR Fallbacks Supplement – also effective from 25 January 2021 – amended the standard definitions for interest rate derivatives to incorporate robust fallbacks in new cleared and non-cleared derivatives that reference the definitions. The provisions of the supplement have been substantively carried over to ISDA’s new 2021 Interest Rate Derivatives Definitions, alongside additional fallback-related provisions.
The 2021 Definitions also represent ISDA’s first natively digital definitional booklet, creating significant efficiencies in how firms use and interact with the definitions. Users can now view a consolidated version of the definitions on demand, see how they have changed over time, and access enhanced user facilities such as hyperlinking to definitions, bookmarking and additional resources – without the need for further PDF or paper supplements.
About the Regulation Asia Awards for Excellence 2021
The Regulation Asia Awards for Excellence recognises financial institutions, technology companies, legal and consulting firms, exchanges and other players that help to ensure the highest standards for regulatory compliance are upheld in the financial industry. Each year, senior industry practitioners serve on a judging panel to help assess and score each submission to determine the winning entrants.
For a full list of the award 2021 winners, visit www.regulationasia.com/awards.
About Regulation Asia
Regulation Asia is the leading source for actionable regulatory intelligence for Asia Pacific markets. With over 12,000 subscribers, including regulatory bodies, exchanges, banks, asset managers and service providers, Regulation Asia plays a key role in shaping the regulatory agenda.