On Thursday May 16, 2013 the CFTC finalized the rules requiring eligible swaps to trade on Swap Execution Facilities (SEFs). This concludes over two years of deliberations by the CFTC over the most effective way to regulate the over-the-counter swaps markets, with the intention of bringing greater transparency to this previously unregulated marketplace.

Once the rules have been published in the Federal Register, the timeline for implementation will come into effect. 60 days after the rules are published prospective SEFs who have received temporary authorization from the CFTC may begin operating as SEFs.

Central clearing of swaps is already under way, with the Phase II of the clearing mandate coming into effect on June 10, 2013 and the third and final phase on September 9, 2013.

MarketAxess CEO, Rick McVey, said: “We are pleased that the CFTC has adopted final Swap Execution Facility rules so that the industry can move forward with greater certainty on execution rules and implementation dates. We have made meaningful investments in our CDS capabilities since we introduced electronic trading of CDS seven years ago and we have spent considerable time in the last few years preparing to operate as a SEF. Our electronic trading volumes in CDS have been growing consistently over the last several years as the industry has embraced new methods of execution. We support transparent, competitive and efficient fixed income and swap markets.”

We are also pleased that the CFTC acknowledged its authority under the Dodd-Frank Act to grant exempt SEF status, and we look forward to working with the Commission to finalize our application.

Read more on the SEF rules from Reuters.

Read more from the FT.

Read more on Bloomberg.

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