Benchmark fallbacks are replacement rates that would apply to derivatives trades referencing a particular benchmark. These would take effect if the relevant benchmark becomes unavailable while market participants continue to have exposure to that rate.
ISDA plans to publish a supplement to the 2006 ISDA Definitions in July to incorporate new fallbacks for derivatives that reference certain key interbank offered rates (IBORs). Simultaneously, ISDA will publish a protocol that will allow market participants to choose to incorporate the revisions into their legacy derivatives trades.
Ahead of the publication, ISDA has published a factsheet, Understanding IBOR Benchmark Fallbacks, as well as a video interview with Ann Battle, Head of Benchmark Reform at ISDA, explaining why changes to fallbacks are necessary.