CFTC Staff Letter 19-28: No-Action Relief for Amendments to Legacy Uncleared Swaps for IBOR Transition

CFTC Letter No. 19-28 No-Action December 17, 2019

Division of Clearing and Risk M. Clark Hutchison III Director Re: Staff No-Action Relief from the Swap Clearing Requirement for Amendments to Legacy Uncleared Swaps to Facilitate Orderly Transition from Inter-Bank Offered Rates to Alternative Risk-Free Rates Ladies and Gentlemen:
This letter from the Division of Clearing and Risk (DCR) responds to a November 5, 2019 letter from the Alternative Reference Rates Committee (ARRC) on behalf of its members that are subject to certain Commodity Futures Trading Commission (CFTC or Commission) regulations. 2 Among other things, ARRC requested no-action relief for failure to comply with certain provisions of the swap clearing requirement promulgated pursuant to section 2(h)(1)(A) of the Commodity Exchange Act (CEA) and codified in part 50 of Commission regulations when swap counterparties amend certain uncleared swaps as part of an industry-wide initiative to amend swaps that reference certain London Interbank Offered Rate (LIBOR) rates and other interbank offered rates (collectively with LIBOR, the IBORs) to reference specified risk-free rates (RFRs). ARRC’s request to DCR focuses on swaps that were executed prior to the compliance date on which swap counterparties were required to begin centrally clearing interest rate swaps (IRS) pursuant to the CFTC’s swap clearing requirement and thus were not required to be