On May 8, the CFTC issued a proposed rule (which was published in the Federal Register on May 12) to modify its swap clearing requirement for interest rate swaps denominated in Canadian dollars and Mexican pesos to reflect the broader market transition from interbank offer rates to alternative reference rates. The proposal would update the CFTC’s regulations at § 50.4(a) to reflect the transition from the Canadian Dollar Offered Rate (CDOR) to the Canadian Overnight Repo Rate Average (CORRA), and from the Mexican Interbank Equilibrium Interest Rate (TIIE) to the Overnight TIIE Funding Rate (F-TIIE) as benchmark reference rates. Specifically, the proposed amendments would expand the stated termination date range for Canadian dollar overnight index swaps referencing the CORRA to seven days to 30 years, add a clearing requirement for Mexican peso overnight index swaps referencing the Overnight TIIE Funding Rate with a stated termination date range of 28 days to 21 years, and remove the clearing requirements for fixed-to-floating swaps referencing the now-unavailable legacy benchmarks (i.e., the CDOR in Canada and the TIIE in Mexico).

The proposed rule notes that the CDOR ceased publication in June 2024, and that the TIIE was prohibited for use in new contracts beginning in 2025 by Mexico’s central bank, subject to a waiver period. The CFTC noted that most CORRA and F-TIIE overnight index swaps are already being cleared voluntarily, and anticipates the additional compliance burden on market participants would be de minimis. The proposal would also amend Regulation § 50.26 to update compliance dates, with the new clearing requirements taking effect 30 days after publication of the final rule in the Federal Register. Comments on the proposed rule are due by June 11.