CFTC Staff Letter 21-28: Revised No-Action Relief from Swap Clearing Requirement for LIBOR Transition Amendments

CFTC LETTER NO. 21-28 NO-ACTION DECEMBER 20, 2021

Division of Clearing and Risk M. Clark Hutchison III Director Re: Revised Staff No-Action Relief from the Swap Clearing Requirement for Amendments to Legacy Uncleared Swaps to Facilitate an Orderly Transition from Inter-Bank Offered Rates to Alternative Risk-Free Rates Ladies and Gentlemen:
This letter responds to a request to revise Letter No. 20-25 1 issued on August 31, 2020, by the Division of Clearing and Risk (DCR) of the Commodity Futures Trading Commission (CFTC or Commission). DCR issued Letter No. 20-25 in response to a letter from the Alternative Reference Rates Committee (ARRC) 2 on behalf of its members that are subject to certain Commission regulations. 3 Among other things, ARRC requested and DCR granted 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) 4 and codified in Part 50 of the Commission’s regulations (Clearing Requirement). 5 This letter, like prior letters, applies only to uncleared interest rate swaps (IRS) that were executed prior to an applicable Clearing Requirement compliance date and for which swap counterparties subsequently amend certain terms solely as part of an industry-wide initiative to amend swaps that reference the London Interbank Offered Rate (LIBOR) and other interbank offered rates (collectively with LIBOR, the IBORs) 6 to reference alternative benchmarks, including risk-free rates (RFRs).