Swap Execution Facilities Regulation - White Papers
White papers, studies and other research on swap execution facilities.
- 1 Clearing Member Recommendations for an Efficient Swap Client Clearing Model - FIA, February 2015
- 2 Pro-Reform Reconsideration of the CFTC Swaps Trading Rules: Return to Dodd-Frank - J.Christopher Giancarlo, January 2015
- 3 Made-Available-to-Trade (MAT): Evidence of Further Market Fragmentation, ISDA, April 2014
- 4 Cross-Border Fragmentation of Global OTC Derivatives, January 2014
- 5 Block Pools: The Rise of Block Trading - Green Key Markets, July 2013
- 6 Joint Survey of Buy-Side Members on Request for Quotes (RFQs), March 2013
- 7 ISDA:Swap Execution Facilities: Can They Improve the Structure of Derivatives Markets?
- 8 References
On February 4, 2015, the Futures Industry Association released a set of recommendations aimed at improving important operational elements of the new clearing infrastructure for over-the-counter derivatives, designed to address inefficiencies in the cleared swaps infrastructure, encourage standardization of trade records, and assist clearing firms in managing limit screening in real-time.
Pro-Reform Reconsideration of the CFTC Swaps Trading Rules: Return to Dodd-Frank - J.Christopher Giancarlo, January 2015
On Jaunuary 29, 2015, CFTC Commissioner J. Christopher Giancarlo released this paper, which analyzes flaws in the CFTC’s implementation of its swaps trading regulatory framework under Title VII of the Dodd-Frank Act and proposes a more effective alternative.
This paper begins with a broad overview of the complex structure of the global swaps market. It then reviews the clear legislative provisions of Title VII of the Dodd-Frank Act. Next, it reviews in detail the Commission’s flawed implementation of the Dodd-Frank Act’s swaps trading provisions.
In January 2014, the International Swaps And Derivatives Association (ISDA) published a research paper detailing its findings from a survey regarding the impact of the CFTC's swap execution facilities regulation on liquidity, volume, volatility and other potential concerns (see below). In April 2014, ISDA published a research note that follows up the January study be reflecting on the effects of the CFTC's "made available to trade" regulation.
In December 2013, ISDA published Footnote 88 and Market Fragmentation: An ISDA Survey, which revealed that the October 2, 2013 effective date for Swap Execution Facility (SEF) compliance, the definition of a US person and the Footnote 88 interpretation are clearly having a disruptive impact on OTC derivative trading volumes. In January 2014, the International Swaps And Derivatives Association (ISDA) published a research paper detailing its findings from a survey regarding the impact of the CFTC's swap execution facilities regulation on liquidity, volume, volatility and other potential concerns.
The Dodd-Frank Act has led to a flurry of activity as market participants are now required to move almost all of their risk onto cleared exchanges or swap execution facilities. In an effort to give insight to market participants attempting to navigate these changes, this whitepaper explores the advantages and disadvantages of exchange trading in both the equities and futures markets. It also proposes a new trading paradigm for institutional derivatives investors to access the positives of exchange trading while avoiding the negative aspects.
In an effort to provide further information to the Commodity Futures Trading Commission as it moves toward adoption of a final Swap Execution Facility (SEF) rule, the Asset Management Group of the Securities Industry and Financial Market Association (SIFMA AMG) and the International Swaps and Derivatives Association (ISDA) developed a buy-side member survey regarding the impact of a requirement to go out to five or more liquidity providers for a request-for-quote (RFQ) platform to qualify as a SEF. Members of the Managed Funds Association (MFA) were also invited to participate in the survey. Here is a summary of the survey results.
On March 29, 2011, the International Swaps and Derivatives Association (ISDA) released a white paper outlining its vision for the structure and core principles of swap execution facilities (SEFs). The paper looks at SEFs in the context of the Dodd-Frank Act and CFTC proposed rules on SEFs. Among ISDA's recommendations:
- Core principles of SEFs should include maximum choice, transparency, access, and flexibility;
- Rules should reflect the specific functions and structure of SEFs, and not be "simply imported from other markets;"
- Current regulatory proposals, such as requirements that SEFs be responsible for determining swap clearing eligibility and soliciting a minimum number of bids for a swap prior to a transaction, are in need of improvement.
- ISDA: SEF Rules Should Provide Greater Choice, Access and Liquidity to OTC Derivatives Market Participants. International Swaps and Derivatives Association Inc.. Retrieved on March 29, 2011.