Canadian and Mexican interest rate swaps must now use new benchmark rates

The US derivatives regulator is changing the rules for how certain interest rate swaps are cleared. This means that swaps tied to Canadian dollars and Mexican pesos will now use new, more stable reference rates instead of older, less reliable ones.

For years, global finance relied on interbank offered rates, which were easy to manipulate and hard to verify. This change is part of a global effort to move away from those rates. It means that the underlying value of billions of dollars in financial contracts will now be based on more transparent, overnight rates, reducing a key source of systemic risk.