In November, the Commodity Futures Trading Commission (CFTC) published a Request for Information and Comments on Swap Clearing Requirement Amendments to Account for the Transition from LIBOR and Other IBORs to Alternative Reference Rates. In this request, the CFTC asks a wide range of questions around the transition to swaps referencing alternative rates, for instance requests to derivatives clearing organizations on volumes, assessment of their ability to perform auctions or to port SOFR positions in case of a futures commission merchant default before the conversion in 2023, questions about conversion experiences, other rates like Ameribor and BSBY, pricing and liquidity of alternative reference rate products etc.
In the response, ISDA makes – in line with responses to the Bank of England and the European Securities and Markets Authority – the point that its members clear a lot of these products voluntarily already but would welcome a clearing mandate to avoid bifurcation of liquidity. We ask for international alignment and sufficient notice before a clearing requirement is enacted. ISDA also asks to exempt transactions stemming from post trade risk reduction from the clearing requirements and to keep in mind the impact of a clearing requirement on a trade execution requirement.
Documents (1) for ISDA Responds to CFTC’s Consultation on Clearing Requirements in Relation to LIBOR Transition
Latest
ISDA Paper on FRTB Rules in Brazil
On March 24, ISDA submitted a paper to Banco Central do Brazil’s (BCB) on its implementation of the revised market risk framework under the Fundamental Review of the Trading Book (FRTB), which represents an important step toward strengthening prudential standards...
IQ Interview with Mark Uyeda
Mandatory clearing of US Treasury securities is due to begin at the end of this year under rules finalized by the Securities and Exchange Commission (SEC) in 2023. SEC commissioner Mark Uyeda talks to IQ about the benefits of clearing...
Response to FCA on CFI Codes for Transparency
On March 19, ISDA responded to Chapter 3 of the UK Financial Conduct Authority’s (FCA) Quarterly Consultation CP26/8 on transparency requirements for financial instruments under Market Conduct Sourcebook (MAR) 11. Sections 3.11-3.13 of the consultation paper explain a discrepancy between...
Why We Need Safe and Efficient SFT Markets
Securities financing transactions (SFTs) play a vital role in fostering liquidity, mobilizing collateral and supporting the smooth functioning of derivatives markets. But during periods of stress, secured funding markets often come under pressure just when they’re needed most, with reduced...