CFTC Seeks Feedback on Swap Clearing Requirement as Libor Transition Looms

With certain tenors of Libor set to sunset at the end of 2021, the Commodity Futures Trading Commission has issued a request for information on potential ways to amend its swap clearing requirement to address the transition away from Libor to alternative reference rates. The CFTC said it is seeking feedback 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,” including the potential costs and benefits that may arise if changes are made to current rules.

The European Securities and Markets Authority—which oversees the EU’s securities markets—also this week proposed changes to its clearing and derivatives rules to support the Libor transition.

In related news, the Financial Stability Board today emphasized that “market participants will need to act with urgency” to ensure they are prepared to transition away from Libor by year-end. While FSB noted that significant progress has been made to end dependency on Libor, “continued reliance of global financial markets on Libor poses risks to global financial stability.”