FCA steps up call for Libor ‘pre-death’ trigger in swaps

Failure to insert pre-cessation trigger could disrupt hedging of cleared swaps, warns regulator

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Regulators are piling pressure on the derivatives industry to hardwire so-called pre-cessation triggers into swaps fallbacks.

The move would see Libor contracts automatically switch to alternative risk-free rates if the discredited benchmarks are deemed unrepresentative of underlying funding markets.

Major swaps clearing houses have already signalled they may unilaterally shift all cleared Libor