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Financial Services Law Insights and Observations

CFTC updates its interest rate swap clearing requirements as LIBOR ends

Federal Issues Agency Rule-Making & Guidance CFTC LIBOR Swaps Federal Register Interest Rate

Federal Issues

On August 12, the CFTC issued a final rule updating its interest rate swap clearing requirement under part 50 of the CFTC’s regulations. Among other things, the final rule eliminates the requirement to clear interest rate swaps referencing LIBOR and other interbank offered rates and replaces them with requirements to clear interest rate swaps referencing overnight, nearly risk-free reference rates. The final rule also “updates the swaps required to be submitted for clearing to a derivatives clearing organization (DCO) or an exempt DCO and the compliance dates for such swaps.” According to CFTC Chairman Rostin Behnam, the final rule “promotes financial stability and mitigates systemic risk,” and “is essential to ensure cross border harmonization in the interest rate swaps market.” The final rule is effective 30 days after publication in the Federal Register.

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