Dealers consider ditching FRAs prior to Libor’s death

Forward rate agreements won’t work with backward-looking rates; banks explore single period swaps instead


Traders are looking at abandoning forward rate agreements over fears that a new breed of reference rates will render the product unworkable. Instead, they are exploring a backward-looking swap as a replacement.

As financial firms prepare for the likely demise of the widely used benchmark Libor, working groups are developing contractual back-ups for instruments to move to alternative rates. Many of these so-called fallback rates are backward-looking, which is incompatible with the structure of

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