LCH targets hardwired pre-cessation triggers

Proposal aims to align transfer pricing for cleared and bilateral markets in the event of split on ‘zombie Libor’ triggers

LCH-offices-in-Aldgate
LCH headquarters in London
Photo: Brett Gamston

The largest clearer of interest rate swaps is proposing to automatically flip cleared Libor swaps to alternative fixings if regulators deem the ailing benchmark to be non-representative of underlying markets.

In a consultation on changes to its rule book, released on January 27, LCH is seeking approval from users of its SwapClear service to firm up its procedure for switching benchmarks, amid industry calls for more clarity on the trigger.

“We already have that right [to use alternative rates]

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