Splits emerge over ‘pre-cessation’ fallback triggers

CCPs say cleared swaps will move to new rates if Libor is no longer representative of markets

divergence

Derivatives users are divided on whether and how to include pre-cessation triggers in fallbacks for legacy Libor swaps, raising the prospect of a bifurcated transition to alternative reference rates for cleared and non-cleared products. 

On August 9, the International Swaps and Derivatives Association released the preliminary results of its consultation on adding a fallback trigger that would be activated if regulators determine that Libor is no longer a representative benchmark. As it stands,

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