In December 2019, the International Swaps and Derivatives Association (ISDA) responded to a November 2019 letter from the Financial Stability Board’s (FSB) Official Sector Steering Group (OSSG) asking the ISDA to add a pre-cessation trigger in company with the cessation trigger as standard language in the definitions for new derivatives. The OSSG believes “[t]his would help to reduce systemic risk and market fragmentation by ensuring that as much of the swaps market as possible falls back to alternative rates in a coordinated fashion.” The ISDA requested a statement from the Financial Conduct Authority (FCA), and the ICE Benchmark Administration stating “ that the “reasonable period” during which a “non-representative” LIBOR would be published would be minimal (i.e., a number of months not years) after the FCA announces that LIBOR is no longer representative.”

The letter from FCA responding to ISDA’s request included reference to relevant laws and how FCA “intends to apply them”. The FCA’s letter also clarified that its, “preference is for an orderly cessation of LIBOR in which its discontinuation is pre-announced, market participants have prepared for this, and publication of a non-representative LIBOR is avoided.” The FCA’s response to the ISDA can be found here. More information regarding the chronicle of events surrounding group responses regarding the pre-cessation trigger can be found here.