Release Number 8228-20

CFTC Provides Additional Relief to Market Participants Transitioning from LIBOR

August 31, 2020

— The Commodity Futures Trading Commission today announced that the Division of Swap Dealer and Intermediary Oversight, Division of Market Oversight, and Division of Clearing and Risk have each issued revised no-action letters providing additional relief to swap dealers and other market participants related to the industry-wide initiative to transition from swaps that reference the London Interbank Offered Rate (LIBOR) and other interbank offered rates to swaps that reference alternative benchmarks.

“Today’s relief will help smooth the transition away from interbank offered rates (IBORs), particularly with respect to older, legacy swaps that are sitting on the books of dealers and their clients, and in particular end-users around the world,” said CFTC Chairman Heath P. Tarbert. “This relief will remove regulatory obstacles to the adoption of potential protocols updating robust fallback procedures in the event that an IBOR ceases or becomes non-representative. Also, the relief will help market participants continue managing their swap portfolios as clearinghouses implement their planned transition of discount rates towards new reference rates, another vital step in moving the derivatives markets away from IBORs.”

Each revised letter outlines conditions under which counterparties will qualify for relief in connection with amending swaps to update provisions referencing LIBOR, or other IBORs. The revised letters also provide relief for additional types of amendments and refine relief previously provided based on feedback from market participants. The original no-action letters were issued on December 17, 2019, making the CFTC one of the first federal agencies to provide LIBOR-transition relief. [See CFTC Press Release No. 8096-19]

The revised relief each division provided is as follows:

  • CFTC Staff Letter No. 20-23 was issued by the Division of Swap Dealer and Intermediary Oversight to provide relief to swap dealers from registration de minimis requirements, uncleared swap margin rules, business conduct requirements, confirmation, documentation, and reconciliation requirements, and certain other eligibility requirements.
  • CFTC Staff Letter No. 20-24 was issued by the Division of Market Oversight to provide time-limited relief from the trade execution requirement.
  • CFTC Staff Letter No. 20-25 was issued by the Division of Clearing and Risk to provide time-limited relief from the swap clearing requirement and related exceptions and exemptions.