CFTC Seeks Comment On IBOR-Related Swap Clearing Requirement – Finance and Banking

The CFTC requested information and comment on
potential modifications to CFTC Rule 50.4 (“Classes of Swaps Required to
Be Cleared”) to address benchmark reform.

The CFTC is seeking information on, among other things, the
ability of derivatives clearing organizations (“DCOs”) to
offer clearing services for a variety of currency and rate
transactions, including certain non-U.S. currencies and USD LIBOR
Rates. The CFTC requested that DCOs file a submission pursuant to
CFTC Rule 39.5 (“Review of Swaps for Commission
Determination on Clearing Requirement”) for any swaps that are
not currently subject to the clearing requirement.

While the CFTC requested comment in general on the swap clearing
requirement and any other rules that may be impacted by the IBOR
transitions, it is seeking comment specifically on (i) information
on alternative reference rate-referencing swaps and whether to
impose a clearing mandate for such swaps, (ii) documentation
requirements for new swap products, (iii) swap classifications
under the swap clearing requirement and (iv) cost-benefit factors
to consider.

Comments on the request must be submitted within 60 days of its
publication in the Federal Register.

Commentary

The text of the CFTC request is primarily descriptive. It
highlights the history of the clearing requirement and ongoing
transition efforts away from IBOR. The questions themselves are
broad in scope and suggest the CFTC may be taking the occasion of
benchmark reform to reassess a number of questions around what
swaps are or should be subject to mandatory clearing.

Primary Sources

1. CFTC Request for Information and Comment: Swap
   Clearing Requirement Amendments to Account for the Transition from
   LIBOR and Other IBORs to Alternative Reference
   Rates




2. CFTC Press Release: CFTC Issues Request for
   Information and Comment on Swap Clearing Requirement to Address
   IBOR Transition

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