Cleary Gottlieb Supports the ARRC in Obtaining No-Action Relief from the CFTC in Connection with LIBOR Transition

On June 29, 2023, the staff of Division of Market Oversight and Division of Data at Commodity Futures Trading Commission (the “CFTC”) issued a No-Action Letter (“NAL 23-09”) in response to the request from the Alternative Reference Rate Committee (the “ARRC”) with respect to certain swap data reporting requirements set forth in Parts 43 and 45 of the CFTC’s regulations.

The ARRC, supported by Cleary Gottlieb Steen & Hamilton LLP, submitted the request in anticipation of the cessation or non-representativeNESS after June 30, 2023 of remaining tenors of U.S. Dollar London Interbank Offered Rate (i.e., overnight, 1-, 3-, 6-, and 12-month tenors),  CERTAIN USD LIBOR ICE SWAP Rates, and the Moscow Prime Offered Rate (collectively, the “Impacted Rates”).  Consistent with the ARRC’s request, NAL 23-09 provides that the CFTC would not take an enforcement action against an entity for (i) failure to timely report the change in the floating rate pursuant to certain contractual fallback provisions developed by the International Swaps and Derivatives Association, Inc. (“ISDA Fallbacks”) for an uncleared swap referencing the Impacted Rates under CFTC Regulation 45.4, provided the entity uses its best efforts to report the change by the applicable deadline under CFTC Regulation Part 45 but no later than five business days from, but excluding, June 30, 2023; or (ii) failure to report the change in the floating rate pursuant to the ISDA Fallbacks for an uncleared swap referencing the Impacted Rates under CFTC Regulation 43.3.