Swaps users face potential margin bill for Libor transition

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

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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