Consistent with its leading role in supporting transition away from LIBOR by the end of 2021, the Bank of England (the Bank), has signed up to the International Swaps and Derivatives Association’s (ISDA) ‘IBOR Fallbacks Protocol’ (the Protocol) in respect of its own activities as a market participant. ISDA launched the Protocol today and confirmation that the Bank has signed up is available on ISDA’s website. This will apply both to transactions the Bank undertakes on its own behalf, and those it enters into as agent for HM Treasury and other entities.
ISDA’s Protocol provides an efficient mechanism for market participants to amend existing derivative contracts based on LIBOR and a range of other benchmarks to include fallback language. This new fallback language has been developed by ISDA at the request of the Financial Stability Board (FSB), working with a wide range of market participants and international authorities, and the FSB has strongly encouraged its widespread adoption. As the FSB has observed, any market participants who choose not to do so for some or all of their relevant trades will need to take robust alternative steps, such as closing out these positions or appropriate bilateral amendments, to avoid the risk of disruption.
Andrew Hauser, Executive Director for Markets at the Bank of England, said “signing up to the Protocol marks a key milestone in the transition away from LIBOR. The Bank welcomes the depth of support for this Protocol, demonstrated by the extent of early adoption, and the leadership shown by those institutions that have signed up early. Firms cannot rely on LIBOR being published after the end of 2021. Widespread adoption of the Protocol across the full range of market participants is a key step in mitigating these risks.”