CFTC revises swap clearing rules for Canadian and Mexican rates
The CFTC said the rule replaces certain cleared benchmark-rate swaps with CAD- and MXN-denominated swaps tied to overnight, nearly risk-free rates.
The Commodity Futures Trading Commission issued a final rule on Sept. 2 that revises its interest rate swap clearing requirements for Canadian and Mexican rates.
The change affects market participants that trade or clear these swaps by changing which contracts must be submitted to a derivatives clearing organization or an exempt DCO under the agency’s part 50 rules.
The rule removes the clearing requirement for interest rate swaps referencing the Canadian Dollar Offered Rate and the Interbank Equilibrium Interest Rate, or TIIE. It replaces that requirement with a new set of CAD- and MXN-denominated interest rate swaps that reference overnight, nearly risk-free rates, the CFTC said.
The commission said the rule amends Regulations 50.4 and 50.26. It also includes a new set of swaps required to be cleared, removes swaps that are no longer required to be cleared and amends associated compliance dates.
The CFTC said the rule becomes effective 30 days after publication in the Federal Register. The release did not include the publication date or other implementation details.
The change fits into the CFTC’s broader clearing framework, which requires certain standardized interest rate swaps to be cleared through a central clearing system rather than settled bilaterally. Clearing is used to reduce counterparty risk and increase transparency in the swaps market.
The press release did not include quoted remarks from commissioners or agency staff, and it did not say whether the final rule differed from a proposed version.
The rule takes effect 30 days after publication in the Federal Register.
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Editorial note: This article was prepared with AI assistance and includes source attribution for reader review.
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