Swaps users face potential margin bill for Libor transition

New margin rules could snare legacy trades amended to reference alternative rates, lawyers warn

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Any inability to grandfather amended trades could prove "very costly" for market participants

Amending existing Libor-linked derivatives contracts to reference a different benchmark could bring the trades into scope for the new non-cleared margin rules and create significant funding costs for market participants, lawyers have warned. That would make transitioning legacy portfolios difficult without some kind of carve-out, they say.

Since 2013, regulators have overseen efforts to move the swaps market away from relying solely on Libor, and a number of industry working groups are

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