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Screenshot of a breaking news alert e-mail from Q2 2017
Most major swaps industry participants have now received their SEF designation, ready for October 2.
This might have just been a coincidence, or someone at the CFTC has a sense of humor. The CFTC has indeed before combined, in one press release, announcements regarding licenses or other issues which involve more than one company.
But this one rings with some irony.
Two of the last major forex and swaps industry participants to receive their temporary SEF designation are Thomson Reuters and ICAP, news of which the good folks at the CFTC decided to combine into one press release. Thomson Reuters and ICAP, of course, are involved in a very heated head-to-head battle for global dominance of the institutional Forex ECN business, with Thomson Reuters and its FXall subsidiary having the upper hand lately over ICAP and its EBS unit. EBS reported in August its lowest volumes in eight years.
SEFs have been introduced by US financial regulators as a response to the derivatives-driven market collapse of 2008, which led to the unraveling or even (near or total) collapse of financial stalwarts such as Bear Stearns, Lehman Brother, AIG, and RBS, among others. SEFs are aimed at forcing complex derivatives called swaps into open trading venues. Electronic trading platforms that want to trade swaps have to start complying with new rules on October 2.
As we previously reported, the CFTC has provided some relief to SEFs and their clients via a one-month delay for some enforcement and reporting issues.