A Swap Execution Facility (SEF) (sometimes Swaps Execution Facility) is a

platform Platform may refer to: Technology * Computing platform, a framework on which applications may be run * Platform game, a genre of video games * Car platform, a set of components shared by several vehicle models * Weapons platform, a system ...

for financial

swap Swap or SWAP may refer to: Finance * Swap (finance), a derivative in which two parties agree to exchange one stream of cash flows against another * Barter Science and technology * Swap (computer programming), exchanging two variables in the ...

trading that provides pre-trade information (i.e. bid and offer prices) and a mechanism for executing swap transactions among eligible participants. Swap Execution Facilities are regulated by the

Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against mark ...

and the

Commodity Futures Trading Commission The Commodity Futures Trading Commission (CFTC) is an independent agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures, swaps, and certain kinds of options. The Commodity Exchange Act ...

. The regulated trading of certain swaps is a result of requirements in the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., federal district, five ma ...

by the

Dodd–Frank Wall Street Reform and Consumer Protection Act The Dodd–Frank Wall Street Reform and Consumer Protection Act, commonly referred to as Dodd–Frank, is a United States federal law that was enacted on July 21, 2010. The law overhauled financial regulation in the aftermath of the Great Recess ...

(in particular

Title VII The Civil Rights Act of 1964 () is a landmark civil rights and labor law in the United States that outlaws discrimination based on race, color, religion, sex, and national origin. It prohibits unequal application of voter registration requ ...

). Financial swaps have traditionally been traded in

over-the-counter Over-the-counter (OTC) drugs are medicines sold directly to a consumer without a requirement for a prescription from a healthcare professional, as opposed to prescription drugs, which may be supplied only to consumers possessing a valid prescr ...

(OTC) markets. However, regulatory changes have driven reporting, clearing, and settlement functions to SEFs, which are much more tightly regulated. The SEF-execution mandate responds to one of the four derivatives-related

European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been ...

, have proposed similar changes in swap market structure but none have yet been adopted. As of October 2, 2013, any swap listed by a SEF ''may'' be traded by the parties on the SEF, but may also be traded off-SEF in any other lawful manner. The swaps that must be traded on SEFs are both subject to a CFTC-centralized clearing mandate and have been determined to be "made available to trade" (MAT) by at least one SEF. Four categories of interest rate swaps and two categories of credit default swaps are currently subject to clearing mandates.

Regulation

* The

(SEC) is responsible for regulating dealing and trading in security-based swaps, such as many equity swaps and credit default swaps. Proposed rules for security-based Swap Execution Facilities (SB-SEFs) have been pending since 2011. * The

(CFTC) is responsible for regulating the dealing and trading of a much wider range of over-the-counter derivatives, including interest-rate swaps, commodity-linked swaps and certain FX, credit default swaps, and equity swaps. CFTC Commissioner Bart Chilton suggested that the primary benefits will be greater transparency, improved price formation, and better regulatory compliance. The CFTC's final SEF rules went into effect in August 2013 and the first SEFs began operating in October 2013. Previously operating swap trading platforms with multiple-to-multiple trading capability within the regulatory definition of "swap execution facility" could no longer operate legally without registering with the CFTC. The SEF launch on October 2, 2013, was facilitated by a CFTC guidance letter and several conditional and time-limited grants of relief from enforcement against non-compliance with certain technical elements. However, the CFTC in its no-action letters did not grant relief for SEFs from the October 2, 2013 deadline requiring swap trading venues to register. The CFTC regulations further require SEF's to report certain data arising from the execution of a swap to a swap data repository either for real-time public dissemination or confidential regulatory use. Regulations require that if a swap is executed on a SEF, the SEF must provide written confirmation of the terms to each

counterparty A counterparty (sometimes contraparty) is a legal entity, unincorporated entity, or collection of entities to which an exposure of financial risk may exist. The word became widely used in the 1980s, particularly at the time of the Basel I deliberat ...

. After the CFTC certified Javelin Capital Markets SEF's Made Available to Trade (MAT) Submission on January 16, 2014, certain swaps were required to trade on SEFs as of February 15, 2014.

Entities in the swaps industry

Established entities

* TrueEX Groupbr>
*

ICAP (company) NEX Group plc, formerly known as ICAP plc, is a UK-based business focused on electronic financial markets and post trade business for other financial institutions rather than private individuals. They are known as an inter-broker dealer. The ...

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* 360 Trading Network

* Bloomberg L.P.

*

BGC Partners BGC Partners is an American global financial services company based in New York City and London. Originally formed as part of the larger Cantor Fitzgerald organization, BGC Partners became its own entity in 2004. History 1945–1990 In 1945, ...

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*

CME Group CME Group Inc. (Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange, The Commodity Exchange) is an American global markets company. It is the world's largest financial derivatives exchange, and trades in asset clas ...

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* LCH.Clearnetbr>
* Eris Exchang

*

Eurex Eurex Exchange is an international exchange which primarily offers trading in European based derivatives. It is the largest European futures and options market. The products traded on this exchange vary from German and Swiss debt instruments to E ...

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* FX Alliance Inc. (FXall) (NYSE: FX

engaged with

National Futures Association The National Futures Association (NFA) is the self-regulatory organization (SRO) for the U.S. derivatives industry, including on-exchange traded futures, retail off-exchange foreign currency (forex) and OTC derivatives ( swaps). NFA is headquar ...

to perform regulatory services * GFI Groupbr>
engaged with

to perform regulatory services * GTX SE

* ICE Intercontinental Exchangebr>
Credite

* IDC International Derivatives Clearinghous

* Javelin Capital Market

* LatAm SE

* MarketAxess Holding

engaged with

to perform regulatory services * Nodal Exchang

* Clear Market

* Parity Energ

* SwapEx

State Street Corporation State Street Corporation is an American financial services and bank holding company headquartered at One Lincoln Street in Boston with operations worldwide. It is the second-oldest continually operating United States bank; its predecessor, Uni ...

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* TeraExchang

*

Thomson Reuters Thomson Reuters Corporation ( ) is a Canadian multinational media conglomerate. The company was founded in Toronto, Ontario, Canada, where it is headquartered at the Bay Adelaide Centre. Thomson Reuters was created by the Thomson Corp ...

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* Tradeweb Tradeweb Thomson Financialbr>
* Traditio

* Trumar

* Tullett Prebonbr>
*

SuperDerivatives SuperDerivatives (1999-2014) was an American financial services company. It created the first professional real time option pricing tool delivered over the internet. The option prices generated by SuperDerivatives reflected accurately the prices in ...

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Many of the foregoing entities, directly or through affiliates, have pending or temporarily approved SEF registrations with the CFTC. SEFs with temporary registrations may operate for up to two years while the CFTC completes a full review of the SEF's application on Form SEF.

Emerging entities

''Note: above established entities section is for firms that had significant swaps business ahead of the sweeping regulatory reform. The following list is oriented to newer entrants (emerging after the Dodd-Frank Act), representing less established participants. As such this section will necessarily be more illustrative than fully up to date, and likely somewhat transitory.'' * Broadway Technolog

* Cleartrade Exchang

* ClearingandSettlement.co

* DerivaTrus

* eDeri

* First Derivative

http://www.firstderivatives.com/downloads/RNS_James_Sanders_Appointment_15.03.13.pdf] * Integral Development Corp

http://www.integral.com/about_integral/news_and_events/press_releases/2013_may_17.htm] * trueEX LL

* AEGIS SEF

https://aegis-hedging.com/news/cftc-approves-aegis-swap-execution-facility/]

References

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External links