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:
- 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
- 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.
Commentary
The relief is limited in scope, in that it does not cover all aspects of LIBOR transition. Parties that transition away from LIBOR pursuant to bilaterally negotiated terms likely cannot rely on this relief, as it is written to capture transitions that occur pursuant to ISDA-published standardized fallbacks.