CFTC – Action Letter – LIBOR at risk-free rates

CFTC staff issue no-action letter regarding certain reporting requirements for swaps moving from certain LIBOR rates to risk-free rates

Washington, DC (STL.News) The Data Division (DOD) of the Commodity Futures Trading Commission today issued a no-action letter regarding certain swap reporting obligations of Parties 43 and 45 for swaps in transition into under the ISDA LIBOR fallback provisions of reference to certain London interbank banks Offered Rates (LIBOR) at the referencing of risk-free rates (RFR) following the termination or non-representativeness of these LIBORs on December 31, 2021.

The letter states that the DOD will not recommend that the CFTC take enforcement action against an entity for failure to timely report under Part 45 of the Variable Rate Change of a Swap. This action is for floating rate changes made under the ISDA LIBOR fallback arrangements from any Swiss franc, euro, pound or Japanese yen LIBOR content to the applicable RFR. This action is conditional on the entity doing its best to report the change within the applicable time limit in part 45 and in no case reporting the required information beyond 5 working days from December 31, 2021, but excluded.

The letter also states that the DOD will not recommend that the CFTC take enforcement action against an entity for failing to report under Part 43 the change in the variable rate of a swap amended after execution to incorporate the provisions of the swap. ISDA LIBOR fallback to move from benchmark to any content of Swiss Franc, Euro, British Pound and Japanese Yen LIBOR to benchmark an RFR.

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