On February 25, 2020, ISDA® published its second consultation on derivatives pre-cessation fallbacks, entitled 2020 Consultation on How to Implement Pre-Cessation Fallbacks in Derivatives (the 2020 pre-cessation consultation), which seeks further input on ISDA's approach to addressing pre-cessation issues in derivatives contracts that reference USD LIBOR and certain other IBORs.

Specifically, the 2020 pre-cessation consultation asks market participants whether an upcoming Supplement to the 2006 ISDA Definitions should include fallbacks that would apply to all covered derivatives following the first to occur of:

The 2020 pre-cessation consultation follows a similar consultation issued by ISDA in May 2019 (the 2019 pre-cessation consultation) (see Legal Update, ISDA Publishes Two Consultations on IBOR Benchmark Fallbacks). ISDA published a report summarizing the responses of the 2019 pre-cessation consultation in October 2019 (see Legal Update, ISDA Publishes Report on IBOR Pre-Cessation Consultation for Derivatives Contracts). According to the report, most market participants would prefer not to continue referencing a covered IBOR in new derivatives contracts following a public statement from the supervisor of that covered IBOR that it was no longer representative. Views regarding whether and how to implement a pre-cessation fallback trigger related to non-representativeness in derivatives were varied.

The deadline for responses to the 2020 pre-cessation consultation is April 1, 2020, and ISDA notes that this deadline will not be extended. ISDA will hold a webinar on March 4, 2020 to go through the consultation and answer questions submitted in advance of the webinar.