The relief removes regulatory obstacles and provides additional flexibility for market participants.
By Yvette D. Valdez, Adam Bruce Fovent, and J. Ashley Weeks
On August 31, 2020, three divisions of the US Commodity Futures Trading Commission (CFTC) issued revised no-action letters providing additional relief to swap dealers, end users, and other market participants from registration requirements; business conduct standards; uncleared swap margin requirements; and mandatory clearing and trade execution requirements as a result of the looming discontinuation of the London Interbank Offered Rate (LIBOR) and other interbank offered rates (IBORs) and the transition to risk-free rates (RFRs).
The relief came at the request of the Alternative Reference Rates Committee, the group of private-market participants convened by the Federal Reserve Board and the Federal Reserve Bank of New York and that has been leading the transition away from USD LIBOR to the recommended US RFR, the Secured Overnight Financing Rate.
This Client Alert summarizes the no-action letters issued by the Division of Swap Dealer and Intermediary Oversight (DSIO), Division of Market Oversight (DMO), and Division of Clearing and Risk (DCR).
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