CFTC Proposes Updated Clearing Requirements for CAD and MXN Interest Rate Swaps

The Commodity Futures Trading Commission (CFTC) has issued a proposed rule to modify its swap clearing requirements under Part 50 of the agency's regulations. The proposal aims to update the specific interest rate swaps required to be submitted for clearing to a derivatives clearing organization (DCO) or an exempt DCO. Under the proposed amendments, the CFTC would remove mandatory clearing requirements for interest rate swaps that reference the Canadian Dollar Offered Rate (CDOR) and the Interbank Equilibrium Interest Rate (TIIE). These would be replaced by requirements to clear Canadian dollar (CAD)- and Mexican peso (MXN)-denominated interest rate swaps referencing overnight, nearly risk-free rates. The regulatory changes would amend CFTC Regulation 50.4(a) in several ways: - Adjust the stated termination date range for CAD-denominated swaps referencing the Canadian Overnight Repo Rate Average (CORRA) as a floating rate index in the overnight index swap (OIS) class to seven days to 30 years. - Add MXN-denominated swaps referencing the Overnight TIIE Funding Rate to the OIS class, covering a termination date range of 28 days to 21 years. - Remove CAD-denominated swaps referencing CDOR from the fixed-to-floating swap class. - Remove MXN-denominated swaps referencing TIIE from the fixed-to-floating swap class. The proposal also includes updates to CFTC Regulation 50.25(b) to align compliance dates with the new set of clearing mandates. The public comment period will be open for 30 days following the proposal's publication in the Federal Register. Submissions will be accepted electronically via Regulations.gov.