Protocol starts with a bang
(Last updated: )
ISDA have today officially launched the IBOR Fallbacks and Supplement and Protocol.
The supplement amends ISDA’s standard 2006 definitions for interest rate derivatives, incorporating robust fallbacks for IBOR-linked derivatives. Changes take effect on 25 January 2021, from which date the fallbacks will be included in all new cleared and OTC derivative transactions that reference the definitions.
The protocol enables all adherents to incorporate the revisions into their legacy non-cleared derivatives trade. The protocol is open for adherence from today, and has the same effective date as the supplement- 25 January 2021.
The protocol effectively has a soft launch “escrow period” during which market participants could adhere by application to ISDA. At launch, 257 entities have adhered. This is a significant initial number and points to a historically high adherence rate over the next three months.
As with any Protocol, there are a number of good reasons why entities may wish to amend bilaterally, and there are certain products that are unamenable to the Protocol mechanism. That said, it seems clear that the Fallbacks Protocol has got off to an excellent start.
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