Rechtsfragen des LIBOR-Wegfalls
Journal
SZW
Type
journal article
Date Issued
2021
Author(s)
Abstract
For decades, the LIBOR has been the most widely used benchmark interest rate for financial contracts. At the end of 2021, following major manipulation scandals and a dwindling reliability of the rate as a benchmark, LIBOR will be discontinued for most currencies including the Swiss franc. As numerous LIBOR agreements such as credit agreements or capital market instruments (mainly OTC interest rate swaps) do not provide for any fallback mechanisms for this scenario (so called “tough legacies”), there are considerable legal uncertainties for parties thereto. To avoid the consequences of a disordered cessation of the LIBOR, Swiss financial markets authority FINMA has urged supervised banks to pro-actively mitigate risks and – where necessary – seek amicable solutions with their clients. Such solutions may include the mutual agreement on a “market-standard” fallback (e.g. the ISDA 2020 IBOR Fallbacks Protocol) or the conclusion of an entirely new contract. Where the parties fail to find an amicable solution, the outcome under Swiss law must be assessed on a case-by-case basis and is different for derivatives and credit agreements. Asked to interpret or amend a tough legacy contract, a court may find that the cessation of LIBOR results in the termination of the contract.
Language
German
Keywords
Bank
LIBOR
Derivatives
Loans
Swaps
Regulation
Law
Benchmark
Publisher
Schulthess
Publisher place
Zürich
Subject(s)
Division(s)