CFTC Modifies Clearing Requirement for Select Interest Rate Swaps

The Commodity Futures Trading Commission (CFTC) has issued a final rule to modify its clearing requirement for certain interest rate swaps. The new rule updates the types of swaps that must be cleared through a derivatives clearing organization or exempt DCO.

The CFTC's regulations require the clearing of interest rate swaps referencing overnight, nearly risk-free rates. Specifically, the amendments add Canadian dollar (CAD)- and Mexican peso (MXN)-denominated interest rate swaps to this list.

The rule also removes the requirement to clear interest rate swaps referencing the Canadian Dollar Offered Rate (CDOR) and the Interbank Equilibrium Interest Rate (TIIE). Swaps denominated in CAD that reference CDOR will no longer be required to be cleared, but swaps denominated in MXN that reference TIIE will still be subject to clearing requirements.