Asian Options – IQ September 2020

Both Brexit and benchmark reform emerged as headline issues relatively close together – June 2016 for the Brexit referendum and July 2017 when the UK Financial Conduct Authority revealed that LIBOR might not exist after the end of 2021. They are now also approaching their denouement in lockstep: both will require a big push by firms in the remaining months of 2020 in order to be ready for the changes they will bring in 2021 and beyond.

In this issue of IQ, we pick up on both of those topics. As part of our cover package focusing on Asia-Pacific, we explore the progress firms in the region have made on LIBOR transition, as well as efforts to build liquidity in alternatives to local interbank offered rates (IBORs). As big users of LIBOR, Asian institutions have large legacy exposures – and, as some regulators in the region are warning, prompt action is needed now to deal with them.

The rollout of new, robust fallbacks will help reduce the systemic disruption that would likely occur in the event an IBOR ceases to exist, and ISDA will shortly publish a supplement and protocol to incorporate fallbacks into derivatives contracts that reference key IBORs. According to a statement from the ISDA board of directors in July, the protocol will be the “most efficient way for participants in the vast majority of non-cleared derivatives markets to mitigate against the risks associated with the discontinuation of a key IBOR”.

When it comes to Brexit, one of the open questions relates to disputes on derivatives transactions where the parties have opted for their ISDA Master Agreement to be governed by English law and subject to the jurisdiction of English courts. Specifically, there is still some uncertainty over the recognition and enforcement of English court judgements in Europe after the end of the Brexit transition period on December 31, 2020.

In this issue, we look at this question from a variety of perspectives. As well as an analysis of possible scenarios for how European states will treat English court jurisdiction clauses and judgements post-transition, we also begin a series of articles exploring the options derivatives participants have for the resolution of disputes.

Whether ramping up LIBOR transition efforts, implementing new fallbacks or exploring the impact of different scenarios after the Brexit transition period, much of the hard work and preparation needs to occur now. To support members, ISDA will continue to publish information and analysis on its website (www.isda.org/fallbacks, www.isda.org/tag/brexit), and, where possible, develop industry solutions to ease implementation challenges.

Click on the attached PDF to read the full issue.

Documents (1) for Asian Options – IQ September 2020

SPS Matrix – SPS Naming Convention

This document sets out the naming convention for how the Settlement Price Sources (“SPSs”), as defined in the ISDA Digital Asset Derivatives Settlement Price Matrix (the “SPS Matrix”), should be named to increase consistency and understandability. ISDA formalized the SPS...

A Global Blueprint for Market Risk Reform

The global financial crisis of 2007-2009 exposed fundamental weaknesses in how banks measured and managed risk, and the repercussions were felt by economies all over the world. In response, policymakers sought to rebuild trust and resilience in the global financial...

SwapsInfo Q3 2025 and Year-to-September 30, 2025

Trading activity in interest rate derivatives (IRD) and credit derivatives increased in the third quarter of 2025 compared with the same period in 2024, reflecting shifting monetary policy expectations and broader market conditions. IRD traded notional rose by more than...

ISDA Extends Saudi Arabia Netting Opinions

ISDA has extended its netting opinions for Saudi Arabia to cover regulations published by the Capital Market Authority (CMA) earlier this year that recognize the enforceability of close-out netting. The CMA regulations were published in July, and follow similar rules...