Fact Sheet: Core Principles and Other Requirements for Swap Execution Facilities

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Dodd-Frank Timeline, Core Principles for SEFs, CFTC
Final Rule Issue Effective Date Compliance Date
June 4, 2013 August 5, 2013 October 2, 2013 (one-year phase-in of RFQ minimum); Also see No-action relief note

On December 16, 2010, the CFTC held an open meeting on the Eighth Series of Proposed Rules under the Dodd-Frank Act. Among the topics at this meeting was a rule proposal regarding the defining and setting of core principles and other requirements for swap execution facilities.<ref>Open Meeting on Eighth Series of Proposed Rules under the Dodd-Frank Act. CFTC. Retrieved on March 2, 2011.</ref>

Among the provisions in the proposal:

  • SEFs would be required to provide basic functionality that gives all market participants the option to post both firm and indicative quotes to multiple parties, including all other parties participating in the SEF;
  • Assuming the "basic functionality" above, SEFs should deploy request for quote (RFQ) systems or order books;
  • Any bids or offers resting on the trading system or platform pertaining to the same instrument must be taken into account and communicated to the requester along with the responsive quotes;
  • RFQ participants must request quotes from at least five other market participants;
  • Order Books include: electronic trading facilities or platforms in which all market participants in the trading system or platform can enter multiple bids and offers, observe bids and offers entered by other market participants, and choose to transact on such bids and offers; and
  • Guidance and acceptable practices governing the general obligations of SEFs,include:
    • Trading and products requirements;
    • Compliance obligations;
    • Operational capabilities;
    • Surveillance obligations; and
    • Financial information and resource requirements.

The affiliated fact sheet can be found below.

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