The Commodity Futures Trading Commission (CFTC) is seeking comments on how it could amend the swap clearing requirement to address the cessation of certain interbank offered rates (IBORs) used as benchmark reference rates and the market adoption of alternative reference rates—namely, the overnight, nearly risk-free reference rates. It also includes enumerated requests for data and other information related to IBOR and alternative reference rate swaps and enumerated requests for comment related to the CFTC’s current swap clearing requirement, alternative reference rate swaps, new swap product documentation, and swap clearing requirement specifications. CFTC will use the information and comments received to inform modifications to the CFTC’s swap clearing requirement to address ongoing benchmark transition efforts. The feedback period ends on January 24, 2022.
CFTC recognizes that information related to the transition away from IBORs is changing daily. Thus, it invites commenters to provide new or updated information related to any aspect of the transition away from IBORs that may offer additional background for CFTC to consider. CFTC requests information related to a derivatives clearing organization's ability to continue clearing or offering clearing services for swaps that reference GBP LIBOR, JPY LIBOR, CHF LIBOR as well as 1-week and 2-month USD LIBOR after December 31, 2021, EONIA after January 03, 2022, or, in the case of remaining USD LIBOR tenors and SGD SOR-VWAP, after June 30, 2023. CFTC also requests comments on actions or regulatory amendments that could facilitate the IBOR transition for market participants. If CFTC recommends to modify the termination date range, or any other specifications, with respect to SONIA overnight index swaps (OIS), AONIA OIS, CORRA OIS or any other OIS that are subject to the Clearing Requirement and for which the index has been nominated as an alternative reference rate, please discuss a potential timeline for considering and adopting a modification and the reasons for adopting such timeline.
CFTC requests that registered swap dealers and other market participants provide data related to market participants' outstanding net LIBOR risk as of November 30, 2021. In general, CTC requests comment on all aspects of the swap clearing requirement and any related regulations that may be affected by the transition away from LIBOR and the other IBORs to alternative reference rates. CFTC seeks comments on these matters generally and commenters are also encouraged to address any relevant matters that are not specifically identified in the requests for comment in this Federal Register notice. CFTC recognizes that, at this time, a majority of the swaps subject to the Clearing Requirement fall within the fixed-to-floating swap class. However, this may change as new alternative reference rates are adopted and will be characterized as OIS or other types of swaps. Among other factors, CFTC is seeking comments on whether it should designate any additional classes of swaps or specifications for purposes of classifying swaps under the CFTC regulation 50.4 or whether derivatives clearing organizations or market participants have suggestions about how to reorganize or structure the classes of swaps subject to the clearing requirement under this regulation.
Related Link: Federal Register Notice
Comment Due Date: January 24, 2022
Keywords: Americas, US, Banking, Securities, Derivatives, Swaps, LIBOR Transition, Benchmark Reforms, LIBOR, IBORs, Alternative Reference Rates, Overnight Index Swaps, EONIA, Swap Clearing, CFTC
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