Leaving LIBOR – the ISDA Protocol and Supplement

With LIBOR due to disappear by end-2021, work has been underway to facilitate the transition from LIBOR and other IBORs to alternative risk free rates (RFRs). The derivatives market has been at the forefront of the transition and is some distance further ahead than other financial markets. In particular, ISDA has recently published the 2020 … Read more

Commercial Court grants declaratory relief to bank relating to its rights under the 1992 ISDA Master Agreement

The Commercial Court has granted declaratory relief concerning a bank’s rights under an interest rate hedging arrangement governed by the 1992 ISDA Master Agreement: BNP Paribas SA v Trattamento Rifiuti Metropolitani SPA [2020] EWHC 2436 (Comm). This is the substantive English trial judgment in the long-running (and cross-jurisdictional) dispute between BNP Paribas S.A. (the Bank) … Read more

ISDA pre-cessation fallback consensus: will this reduce legacy LIBOR risk in the derivatives market?

The International Swaps and Derivatives Association (ISDA) has announced the preliminary results of its re-consultation on the implementation of pre-cessation fallbacks for derivatives referenced to LIBOR (see press release). It follows an earlier consultation on pre-cessation fallbacks last year, which failed to achieve market consensus on whether or not (and if so, how) to include … Read more

Commercial Court dismisses challenge to exercise of options in swap confirmations incorporating 2000 ISDA Definitions

The Commercial Court has dismissed a challenge to the exercise of options contained in five extendable interest rate swaps which incorporated the 2000 ISDA Definitions: Alfred Street Properties Ltd v National Asset Management Agency [2020] EWHC 397. The challenge was brought on the basis that notice was either not given by a contractually prescribed method … Read more

ISDA to re-consult on pre-cessation fallbacks: litigation risk for legacy LIBOR contracts

The International Swaps and Derivatives Association (“ISDA”) announced yesterday that it will re-consult on how to implement pre-cessation fallbacks in derivatives contracts. This is an important development for financial institutions with large books of legacy LIBOR-linked products. The announcement follows an earlier consultation on pre-cessation fallbacks last year, which failed to achieve market consensus on … Read more

The transition from LIBOR: FCA conduct risk warning and next steps

Over the past couple of weeks, the FCA has released two important communications in the context of the discontinuation of LIBOR, which is expected to cease after end-2021. On 19 November 2019, the FCA published a paper setting out a series of questions and answers for firms about conduct risk during LIBOR transition. Then on … Read more

Court of Appeal finds ISDA jurisdiction clause trumps competing clause in related contract

The Court of Appeal’s judgment in BNP Paribas SA v Trattamento Rifiuti Metropolitani SPA provides further assurance that jurisdiction clauses within standard form ISDA documentation will not readily be displaced by contrary jurisdiction clauses in related contracts. The Court of Appeal gave effect to an English jurisdiction clause in an ISDA Master Agreement over an apparently competing … Read more