Many IBOR remediation projects raise a basic question: How do you find, collect, review, and remediate the right contracts? A company might have thousands of contracts that need to be repapered, and those contracts might be scattered throughout electronic file systems and hardcopy records.

Fortunately, litigators have spent the past few decades wrestling with very similar questions, which crop up in the discovery process in any large-scale modern litigation. As the number of discoverable electronic documents exploded over time, litigators began developing sophisticated processes for finding, collecting, and reviewing them so that they could be produced to opposing counsel or used at trial. Those time-tested e-discovery techniques can be applied to IBOR remediation projects.


Continue Reading e-Discovery and IBOR Remediation: Similar Techniques, Different Goals

As preparation for the transition from the London Interbank Offered Rate and similar interbank offered rates to replacement benchmark interest rates quickly accelerates, we explore a number of recent core global developments affecting structured finance products.

Read the full article from the Winter 2020 issue of our Structured Finance Bulletin.

On November 30, 2020, ICE Benchmark Administration Limited (“IBA”) announced its intention, in early December 2020, to consult on the proposed cessation of the publication of:

  • the one-week and two-month USD LIBOR settings immediately following the LIBOR publication on December 31, 2021; and
  • the overnight and one-, three-, six- and 12-month USD LIBOR settings immediately following the LIBOR publication on June 30, 2023.

IBA expects to close the consultation for feedback by the end of January 2021. IBA also noted that any publication of the overnight and one-, three-, six- and 12-month USD LIBOR settings based on panel bank submissions beyond December 31, 2021, will need to comply with applicable regulations, including as to representativeness.


Continue Reading ICE Benchmark Administration to Consult Regarding Cessation of 1-Week and 2-Month USD LIBOR by December 31, 2021, and of Other Tenors by June 30, 2023

On November 18, 2020, ICE Benchmark Administration (“IBA”), the authorized administrator of LIBOR regulated by the UK Financial Conduct Authority (“FCA”), announced that it will consult on its intention to cease publication of all tenors of euro, sterling, Swiss franc and yen LIBOR after December 31, 2021, subject to confirmation following IBA’s consultation and any rights of the FCA to compel continued publication by IBA. IBA is still in discussions with the FCA, official sector bodies, and panel banks regarding the future of US Dollar LIBOR.

Continue Reading “The End is Nigh”: UK FCA Issues Consultations Regarding Expected New Benchmark Powers in Response to ICE Benchmark Announcement; ISDA Issues Related Statement

As everyone knows by now, with the demise of LIBOR and other IBORs, insurance companies, banks, and a wide range of other financial institutions are faced with identifying, reviewing, and remediating all active contracts that reference an IBOR rate. Many that have begun this process are learning that the process is much less daunting if those instruments are centralized in a digital contract management tool.

Continue Reading IBOR: A New Frontier for Digital Contract Management

On October 13, 2020, the Division of Market Oversight of the Commodity Futures Trading Commission (“CFTC”) issued swap transaction and pricing data reporting relief to specific derivatives clearing organizations (“DCOs”) and market participants participating in upcoming DCO auctions that will help transition certain cleared swaps from discounting using the Effective Federal Funds Rate to the Secured Overnight Financing Rate. This discounting transition is an essential part of the industry-wide initiative to transition from swaps that reference the London Interbank Offered Rate, and other interbank offered rates, to swaps that reference alternative benchmarks.

Continue Reading US CFTC Provides Reporting Relief for Swaps Related to Upcoming DCO Auctions Required for LIBOR Transition

On October 9, ISDA published a statement from its board of directors announcing that ISDA will launch the IBOR Fallbacks Supplement to the 2006 ISDA Definitions and the ISDA 2020 IBOR Fallbacks Protocol on October 23, 2020, and that the supplement and the amendments made by the protocol will take effect on January 25, 2021.

Artificial intelligence (“AI”) isn’t just a buzzword for eDiscovery practitioners. It’s been a part of their standard toolset for a decade now, starting with early “predictive coding” tools. eDiscovery now supports a robust, mature selection of technology-assisted review (“TAR”) AI technologies, with Continuous Active Learning being the most widely adopted. eDiscovery Practitioners thus have direct experience with the benefits (and limitations) of AI. Much of this experience can be leveraged to help businesses in IBOR transition projects.

 
Continue Reading TAR Tools Have Some Explaining to Do

On September 23, 2020, Scott O’Malia, CEO of the International Swaps and Derivatives Association (“ISDA”), stated that ISDA is now on the cusp of publishing the IBOR Fallbacks Protocol (the “Protocol”) and the IBOR Fallbacks Supplement (the “Supplement”), and provided an updated timetable of the remaining steps to publication and effectiveness[1].

The Protocol and Supplement are being published to address the anticipated cessation of publication of LIBOR at the end of 2021, and the market transition to risk-free rates, including SONIA, SOFR, €STR, SARON and TONAR. The Protocol will enable market participants that elect to adhere to incorporate fallback language into legacy derivatives contracts with other adhering counterparties in order to transition to replacement benchmarks. The Supplement will ensure that any new derivatives contracts entered into after its effective date that incorporate the 2006 ISDA Definitions and reference a covered IBOR rate will automatically include new fallbacks without any further action by the parties.


Continue Reading ISDA Raises Starter Pistol on IBOR Transition Race