Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today issued Orders granting registration to 18 swap execution facilities (SEFs). The SEFs issued a Registration Order today previously were operating under temporary registration status. SEFs are trading facilities that operate under CFTC’s regulatory oversight for trading and processing swaps. SEFs were authorized to be created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to provide greater pre-trade and post-trade transparency to the swaps market.
The SEFs approved for registration are: 360 Trading Networks Inc.; BGC Derivatives Markets, L.P.; Bloomberg SEF LLC; Chicago Mercantile Exchange Inc.; DW SEF LLC; GFI Swaps Exchange LLC; ICAP Global Derivatives Limited; ICAP SEF (US) LLC; ICE Swap Trade, LLC; Javelin SEF, LLC; LatAm SEF, LLC; MarketAxess SEF Corporation; SwapEx, LLC; Thomson Reuters (SEF) LLC; tpSEF Inc.; Tradition SEF, Inc.; trueEX LLC; and TW SEF LLC.
With registration, the SEFs will be required to demonstrate continued compliance with all applicable provisions of the Commodity Exchange Act and CFTC regulations, including Part 37, and any future regulations, amendments, guidance, and interpretations issued by the CFTC.
CFTC staff is continuing with registration reviews for the remaining five SEFs that currently are temporarily registered. Pending their reviews, those facilities continue to operate under temporary registration status.
Statement of Commissioner J. Christopher Giancarlo Regarding Full Registrations of Swap Execution Facilities
Five and a half years after the Dodd-Frank Act required the registration of U.S. platforms for swaps transactions, the CFTC has today announced full registration of 18 applicants as swap execution facilities (SEFs). It is a notable accomplishment. I commend the Division of Market Oversight staff for completing this step to enhance the safety and soundness of U.S. financial markets.
The staff’s work was made unreasonably more complicated by having to apply the CFTC’s misconceived swaps trading rules to the distinct liquidity characteristics, long-established market practices and sophisticated market structure of the global swaps markets. Yet, completing this registration process reduces uncertainty for market participants who have been served by temporarily registered SEFs for the past two plus years.
Still, it cannot go unremarked that, in order to make full registration a reality, the Commission expressly relies on a series of five time-limited staff no-action letters to provide “workarounds” for its flawed swaps trading rules. Without reliance on the no-action letters, registration could not have been achieved without substantial harm to the existing marketplace. The Commission’s dependence on this hodgepodge of workarounds confirms what I said in my White Paper – that the CFTC’s flawed swaps trading rules are broadly mismatched to the inherent structure and workings of global swaps markets.
Relying on no-action letters for full registration does not fix the underlying flaws in the CFTC’s swaps trading rules. It does not provide the regulatory certainty that is a necessary element of marketplace confidence essential to sustainable economic recovery.
Now that the full SEF registration process is mostly complete, I urge the Commission to adopt the recommendations in my White Paper and Six Month Progress report and finally fix the swaps trading rules. Simply codifying the existing flawed no-action letters will not adequately address the underlying issues. It is past time to align the CFTC’s swaps trading regulatory framework with the clear mandate of Title VII of the Dodd-Frank Act.