MFA Blog

CFTC Announces Key SEF Measures

Posted on February 11, 2014

Last night, the Commodity Futures Trading Commission (CFTC) announced four key measures to promote trading on swap execution facilities (SEFs) and to support an orderly swaps market transition to mandatory trading.  The four key measures are as follows:

  1. Interim Final Rule for Protecting Counterparty Identities in SDR Data. The CFTC issued an interim final interim rule to facilitate anonymous trading on SEFs for swaps that are intended to be cleared.  The interim final rule is responsive to MFA’s concerns and request for clarification. Specifically, it clarifies that, for a swap that is executed anonymously on a SEF or designated contract market (DCM), and then cleared in accordance with the CFTC’s straight-through processing requirements, the data and information maintained by a registered swap data repository (SDR) that may be accessed by either counterparty to the swap does not include the identity of the other counterparty to the swap, the identity of the other counterparty’s clearing member for the swap, or the legal entity identifier (LEI) of such counterparty or its clearing member. Once published in the Federal Register, the interim final rule will have a 30-day public comment period.  The pre-publication interim final rule release can be read here.
  2. No-Action Relief for Package Transactions. The Division of Market Oversight (DMO) issued a no-action letter providing relief until May 15, 2014 from mandatory trading of certain swaps executed as part of “package transactions.”  DMO’s no-action letter is responsive to MFA’s January 24th request letter for temporary no-action relief.  Access the text of DMO’s no-action letter No. 14-12 here.  The 90-day no-action period will provide CFTC staff with more time to consider the technological, operational, and jurisdictional issues for mandatory trading of package transaction.  MFA’s member representative will participate in DMO’s February 12th Roundtable to discuss the challenges surrounding the execution of package transactions through SEFs and DCMs.
  3. DMO Guidance on SEF Jurisdiction. DMO also issued guidance to clarify that while CFTC Rule 37.202(b) requires that market participants trading on a SEF consent to its jurisdiction, such consent does not need to be obtained in an affirmative writing.  Rather, a SEF may comply with this requirement by providing in its rulebook that any person initiating or executing a transaction on or subject to the rules of the SEF directly or through an intermediary, and any person for whose benefit such a transaction has been initiated or executed, consents to the jurisdiction of the SEF.
  4. CFTC Website Location for MAT Swaps. The CFTC also announced that it has published a centralized list of swaps subject to the trade execution requirement, which includes specific terms defining such swaps.  Access the CFTC’s online chart of “Made Available to Trade” (MAT) swaps.

The CFTC’s announcement of these key measures is available online here.  Commissioner O’Malia’s Statement in support of these measures can be read here.