On August 9, 2019, ISDA® published a statement on the preliminary results of its supplemental consultation on pre-cessation issues for derivatives contracts that reference certain interbank offered rates (IBORs), including USD LIBOR (see Legal Update, ISDA Publishes Two Consultations on IBOR Benchmark Fallbacks).

The statement announces that responses to the question of whether and how to implement a pre-cessation trigger for derivatives contracts related to "non-representativeness" of an existing IBOR fell into three categories, without a clear majority in any one. Those categories are as follows:

Respondents also voiced concerns related to the pre-cessation trigger itself, as well as its implementation.

ISDA hopes to publish next month an anonymized and aggregated summary of the feedback received in the consultation. Concurrently, ISDA also hopes to consult on a proposed documentation solution for derivatives that allows for efficient incorporation of a pre-cessation fallback trigger in a way that attempts to account for and mitigate against the concerns expressed in the results of this consultation.

On July 30, 2019, ISDA published a related statement on the preliminary results of its supplemental consultation on spread and term adjustments for benchmark fallbacks in derivatives contracts that reference certain IBORs, including USD LIBOR (see Legal Update, ISDA Publishes Statement on Supplemental Benchmark Fallbacks Consultation). Both statements come as a result of market-wide consultations published by ISDA on May 16, 2019 (see Legal Update, ISDA Publishes Two Consultations on IBOR Benchmark Fallbacks).