On September 28, 2016, the CFTC expanded the existing clearing requirement to interest rate swaps through an amendment to regulation 50.4(a), requiring that market participants submit a covered swap for clearing by a derivatives clearing organization. The amendment expanded four interest rate swap classes to require clearing by a DCO: (i) fixed- to-floating interest rate swaps denominated by the Australian dollar, Canadian dollar, Hong Kong dollar, Mexican peso, Norwegian krone, Polish zloty, Singapore dollar, Swedish krona and Swiss franc; (ii) basis swaps denominated in Australian dollars; (iii) forward rate agreements denominated in Norwegian krone, Polish zloty and Swedish krona; and (iv) overnight index swaps (OIS) denominated in Australian and Canadian dollars, as well as US dollar-, euro- and sterling-denominated OIS with termination dates up to three years. Unlike the proposed rulemaking, AUD-denominated forward rate agreements were not included in the final rule. Compliance with the final rule will be phased in over a two- year period according to an implementation schedule based on when analogous clearing requirements will take effect in other jurisdictions.
The final rule is available at: http://www.cftc.gov/idc/groups/public/@newsroom/documents/file/federalregister092816.pdf.
A Q&A document is available at: http://www.cftc.gov/idc/groups/public/@newsroom/documents/file/irsclearing_qa092816.pdf.
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