CFTC making exceptions, at least temporarily, for foreign regulated entities seeking SEF status.
One of the kinks in the CFTC’s implementation of the Dodd Frank Act’s requirement for SEF licensing is that the SEF rules (e.g. regarding disclosure, open order book…) contravene the rules of other jurisdictions.
To help iron out these ‘kinks’, the CFTC has been giving temporary exemption from SEF registration to a number of foreign regulated entities. The latest is Australia’s Yieldbroker Pty Limited.
Yieldbroker is licensed as an exchange under an Australian Market License (AML) and is regulated by the Australian Securities and Investment Commission (ASIC). Yieldbroker operates a multilateral trading platform in Australia which brings together multiple third-party buying and selling interests in swaps. Yieldbroker currently permits direct access to U.S. clients to transact in swaps on its platform.
On September 27, 2013, Yieldbroker provided the CFTC with a confidential draft SEF application. The CFTC then gave Yieldbroker a one month exemption from SEF licensing. As the process is taking more time than originally thought, the CFTC now announced a second one-month extension, to December 1. Yieldbroker, the CFTC and ASIC staff are engaged in discussions regarding an arrangement whereby Yieldbroker would register as an SEF, while maintaining its AML status in Australia.
What are SEFs? SEFs are licensed trading venues, aimed at forcing complex derivatives called swaps out of the ‘private’ over-the-counter market and into open trading venues. Electronic trading platforms that want to trade swaps were to start complying with new rules on October 2.
To see the complete CFTC press release click here.