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

Libor-pre-cessation fallback
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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 portfolios to the new risk-free rates if the benchmark produces anomalous prices, as sourcing

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