Libor derivatives contracts should contain safety net in case of official declaration, US Fed official says

7 October 2019 8:17am
Derivatives contracts that use Libor rates should specify that a substitute rate would automatically kick in if the scandal-plagued index is officially declared unrepresentative of the underlying market, a senior US Federal Reserve official said.

These “pre-cessation triggers” should be in a contract protocol being developed by the International Swaps and Derivatives Association, said David Bowman, head of the Fed-sponsored effort to transition away from the benchmark.