Alongside its China joint operation partner, Zhao Sheng Law Firm (Zhao Sheng), Linklaters advised the International Swaps and Derivatives Association, Inc. (ISDA) on the Chinese language interbank offered rate (IBOR) fallbacks documents, jointly published with the National Association of Financial Market Institutional Investors (NAFMII). The IBOR Fallbacks Supplemental Agreement to the 2009 NAFMII Master Agreement and the IBOR Fallbacks Booklet for China Interbank Market Financial Derivative Transactions documents will enable firms to include contractual fallbacks for certain IBORs into onshore derivatives transactions documented under the 2009 NAFMII Master Agreement in China.
The documents consist of a multilateral amendment agreement that will allow market participants to incorporate the fallbacks into their legacy non-cleared derivatives with other counterparties that choose to sign the agreement. There are also updated definitions of the IBORs with fallbacks that institutions can reference when entering into new onshore derivatives trades under the NAFMII Master Agreement. The new definitions will come into effect on 29 October 2021.
The newly published documents represent a milestone in integrating the standards of the ISDA IBOR fallbacks, adopted by the international financial derivatives industry, into the Chinese onshore financial market.
The Linklaters Zhao Sheng team was led by Linklaters’ structured finance and derivatives partner Chin-Chong Liew and supported by counsel Simon Zhang.
Partner, Chin-Chong Liew, commented:
“Linklaters is a long-term partner of ISDA and has been advising ISDA on the benchmark interest rates reform project. We are grateful for the opportunity in supporting ISDA and NAFMII on the preparation of the IBOR fallbacks supplemental agreement and booklet tailored to the Chinese market, alongside Zhao Sheng, our joint operation partner in China.”
The completion of this transaction consolidates Linklaters’ long-standing reputation for providing seamlessly integrated Chinese and international legal advice through its joint operation, Linklaters Zhao Sheng.
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