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CFTC LIBOR Transition Updates: December 23,2021

CFTC Staff Extends Relief for FCM Separate Accounts

The CFTC Division of Clearing and Risk and the Division of Swap Dealer and Intermediary Oversight (the "Divisions") issued an extension of no-action relief with respect to the treatment of separate accounts by futures commission merchants ("FCMs").

CFTC Letter 19-17 provided guidance for the rules relating to the treatment of separate accounts of the same customer, a beneficial owner. Letter 19-17 provided no-action relief through June 30, 2021, which relief was later extended by a CFTC staff statement to September 15, 2021. Subsequently, in Letter 20-28, the Divisions provided a further extension of the no-action relief until December 31, 2021.

In response to a request from the Futures Industry Association, the Divisions extended the relief with respect to Regulation 39.13(g)(8)(iii) ("Withdrawal of customer initial margin") until September 30, 2022. The Divisions noted that the extension was appropriate to provide the CFTC further time to determine whether action should be taken to codify the relief.

CFTC Revises LIBOR Transition No-Action Letters

The CFTC issued revised no-action letters regarding the financial industry's transition away from LIBOR.

The Division of Clearing and Risk, Division of Market Oversight, and the Market Participants Division of the CFTC released revised no-action letters that the CFTC indicated were intended to address the current expected cessation dates of various LIBORs (in particular, that USD LIBOR will be provided through June 30, 2023).

The series of revised no-action letters are in reference to the date confirmation regarding 2023 USD LIBOR settings. The following revisions and extensions were made:

  • Letter No. 21-26 revises Letter No. 20-23, addressing various requirements applicable to swap dealers and de minimis dealers, including business conduct, documentation, and de minimis counting;

  • Letter No. 21-27 revises Letter No. 20-24, addressing matters relating to the trade execution requirement under CEA Section 2(h)(8); and

  • Letter No. 21-28 revises Letter No. 20-25, in connection with clearing swaps.

All three of the newly issued no-action letters will remain in effect until June 30, 2023, for covered swaps that reference 2023 USD LIBOR settings.

CFTC Staff Provides Swap Reporting No-Action Relief for LIBOR-Transitioning Entities

The CFTC Division of Data ("DOD") issued certain no-action relief relating to reporting requirements associated with LIBOR transition.

In Letter 21-30, the DOD provided no-action relief (in response to a request from the Alternative Reference Rates Committee), in each case where the relevant change(s) occur pursuant to the ISDA IBOR Fallbacks Protocol, the 2006 or 2021 ISDA Definitions, or bilaterally incorporated provisions equivalent to the Protocol:

  1. for failure to timely report a change in the floating rate under CFTC Reg. 45.4 ("Swap data reporting: Continuation data"), for uncleared swaps referencing CHF, EUR, GBP or JPY LIBOR, provided the reporting entity uses best efforts to report by the applicable Part 45 ("Swap Data Recordkeeping and Reporting Requirements") deadline and no later than five business days from, but excluding December 31, 2021; and

  2. for failure to report under CFTC Reg. 43.3 ("Method and timing for real-time public reporting"), for uncleared swaps modified after execution to incorporate fallbacks to transition from CHF, EUR, GBP or JPY LIBOR to reference a pre-defined corresponding risk-free rate plus the relevant spread adjustment published by Bloomberg.


  1. CFTC No Action Letter 21-29

  2.  CFTC No-Action Letter 21-26: Revised No-Action Positions to Facilitate an Orderly Transition of Swaps from Inter-Bank Offered Rates to Alternative Benchmarks

  3.  CFTC No-Action Letter 21-27: Extension of Certain Staff No-Action Relief from the Trade Execution Requirement to Facilitate an Orderly Transition from Inter-Bank Offered Rates to Alternative Risk-Free Rates

  4.  CFTC No-Action Letter 21-28: Revised Staff No-Action Relief from the Swap Clearing Requirement for Amendments to Legacy Uncleared Swaps to Facilitate an Orderly Transition from Inter-Bank Offered Rates to Alternative Risk-Free Rates

  5. CFTC Press Release: CFTC Staff Revises No-Action Letters Regarding Market Participants Transitioning from LIBOR

  6. CFTC Staff Letter No. 21-30

  7. Release Number 8475-21: CFTC Staff Issues No-Action Letter Regarding Certain Reporting Requirements for Swaps Transitioning from Certain LIBORs to Risk-Free Rates

© Copyright 2022 Cadwalader, Wickersham & Taft LLPNational Law Review, Volume XI, Number 357

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