USA, Shearman & Sterling LLP updates

Banking

Contributed by Shearman & Sterling LLP
LIBOR transition: Fannie Mae and Freddie Mac to stop accepting LIBOR and begin accepting SOFR
  • USA
  • 28 February 2020

The Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation recently announced that they will stop accepting London Interbank Offered Rate-indexed adjustable-rate mortgages by the end of 2020. Additionally, the two government sponsored agencies announced that they will soon accept mortgages tied to the Secured Overnight Financing Rate later in 2020.


Capital Markets

Contributed by Shearman & Sterling LLP
Debt buyback and liability management considerations
  • USA
  • 19 May 2020

As the markets continue to react to the COVID-19 pandemic, the trading prices of many corporate loans and bonds have fallen dramatically. As a result, many companies (or their private equity sponsors) are looking at repurchasing their debt at a discount. In addition, many companies are concerned that the impact of the COVID-19 pandemic will result in covenant breaches or other defaults and are engaging in discussions with their lenders and investors to obtain needed modifications to their debt agreements.

SEC issues statement on potentially unlawful online platforms for trading digital assets
  • USA
  • 10 April 2018

The Securities Exchange Commission (SEC) recently issued a statement warning investors of potential risks involving digital asset exchanges. The statement aims to protect investors trading digital assets through online platforms and serves as a warning shot to exchanges dealing in digital assets that may be securities. This is the first time that the SEC has directly targeted exchanges and trading platforms in the context of virtual currencies and initial coin offerings.


Derivatives

Contributed by Shearman & Sterling LLP
ARRC announces 2020 objectives for facilitating USD LIBOR transition
  • USA
  • 13 May 2020

The Alternative Reference Rates Committee (ARRC) recently unveiled its 2020 objectives for facilitating the industry's transition away from the US dollar London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate. These goals and projected timelines build on the ARRC's previous transitioning work and aim to account for both the impact of COVID-19 on financial markets and the expectation that LIBOR will still be discontinued at the end of 2021.

CFTC staff issues three letters providing LIBOR transition relief to market participants
  • USA
  • 11 March 2020

The Commodity Futures Trading Commission (CFTC) recently issued three no-action letters providing relief for swap transactions (and amendments to swap transactions) in connection with the expected market transition from using the London Interbank Offered Rate and other interbank offered rates. The approach is consistent with an increasing focus at the CFTC and other regulators on facilitating an orderly transition to alternative rates.

SEC finalises capital, margin and segregation requirements
  • USA
  • 13 November 2019

As a further step towards the implementation of its security-based swap regime, the Securities and Exchange Commission (SEC) has adopted a number of long-awaited capital, margin and segregation requirements for security-based swap dealers and major security-based swap participants. The SEC's final rules address one of the key remaining questions required to implement the security-based swap regime: which capital and margin requirements will apply to non-bank dealers?

SEC proposes modifications to cross-border application of security-based swaps regime
  • USA
  • 04 September 2019

The Securities and Exchange Commission (SEC) continues to take steps towards the implementation of its security-based swap (SBS) dealer registration framework. In a recent proposal, the SEC has sought to address certain questions as to the cross-border implementation of its SBS regime and, in some cases, to further harmonise its regulations with the Commodity Futures Trading Commission's swaps regulatory framework.

CFTC proposes amendments to DCO core principle regulations
  • USA
  • 10 July 2019

The Commodity Futures Trading Commission has proposed a series of changes to its general regulations governing derivatives clearing organisations (DCOs). While the proposed amendments intend to (among other things) enhance certain risk management and reporting obligations, many of them would require significant changes to current practice and impose new obligations on DCOs and their clearing members.


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