CFTC relaxes certain SEF reporting rules, to incentivize SEF trading

It seems as though trading volumes on Swap Execution Facilities, or SEFs, are not what regulators initially anticipated. To encourage more SEF trading, CFTC Acting Chairman Mark Wetjen  announced three actions to (among other things) promote end-user trading on (SEFs), as well as on designated contract markets (DCMs).

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 of last year, although full compliance with more rigorous SEF rules is taking more time than planned.

Specifically, the CFTC issued a ‘no-action letter’ that provides relief with respect to compliance with certain recordkeeping provisions. The letter provides relief with respect to keeping electronic text messages and records in a form and manner identifiable and searchable by transaction. Many SEF members are finding the new recordkeeping requirements time-consuming and expensive to effect.

Text of the CFTC’s full letter on the matter can be seen here.

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CFTC relaxes certain SEF reporting rules, to incentivize SEF trading


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