A sweeping agreement designed to prevent turmoil from being unleashed in the global derivatives market when LIBOR expires is gaining widespread acceptance.

Nearly 14,000 parties have agreed to sign on to the International Swaps and Derivatives Association (ISDA) protocol, according to the organization. The pact allows for the London interbank offered rate (LIBOR) to automatically be yanked from hundreds of trillions of dollars of interest-rate swaps, futures, and options and replaced with another rate, addressing a major risk hanging over markets as the discredited benchmark's end nears. While it doesn't completely rule out the potential for disruption, the protocol goes a long way toward ensuring a smooth transition.

"The ISDA protocol has been a resounding success in de-risking the derivatives market," said Tom Wipf, chair of the Alternative Reference Rates Committee (ARRC), the Federal Reserve–backed group guiding the transition. "People's biggest concern was asymmetric take-up. There are very few household names or big players in the market that haven't adhered."

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