On February 24, 2020, ISDA announced that it was seeking input from stakeholders on whether to add a pre-cessation trigger to its standard documentation to address when LIBOR benchmark rates are no longer available. A pre-cessation trigger refers to the case where the UK Financial Conduct Authority (FCA) announces that LIBOR benchmark rates are no longer capable of being representative benchmark rates prior to permanently discontinuing the applicable LIBOR rate. If the FCA were to find LIBOR unrepresentative, many market participants have expressed concern about continuing to reference an unrepresentative rate, even though it is continuing to be published.
ISDA’s consultation offered two different suggested approaches to amend parties’ trading documentation. First, ISDA proposed to add a no-longer representative trigger to the current triggers that occur where LIBOR has permanently ceased. Alternatively, ISDA developed a second approach where parties could electively incorporate the pre-cessation trigger into their trading documentation. Note that if ISDA does not adopt a pre-cessation trigger after assessing the responses to the consultation, market participants who still wish to incorporate a pre-cessation trigger could still bilaterally negotiate their own terms. The consultation closed on April 1, 2020 and details of received responses should be available soon on the ISDA website here. You can also read Chatham's response to this consultation.