On June 11, ISDA responded to the US Commodity Futures Trading Commission’s notice of proposed rulemaking on the clearing requirement determination under Section 2(h) of the Commodity Exchange Act for interest rate swaps to account for Canadian dollar-denominated and Mexican peso (MXN) denominated interest rate benchmark transitions.

ISDA supports the proposed updates, which include removing fixed-to-float swaps referencing the Canadian Dollar Offered Rate and Mexican Interbank Equilibrium Interest Rate (TIIE) and expanding the clearing requirement on products referencing the Canadian Overnight Repo Rate Average and MXN Funding TIIE overnight index swaps within defined maturity ranges. ISDA recommends an implementation period of at least three months.

ISDA also calls for an exemption from the clearing requirement for transactions arising from post-trade risk reduction exercises, consistent with developments in other jurisdictions.