07.15.2013

MarketAxess Applies To Become SEF

07.15.2013
Terry Flanagan

MarketAxess Holdings, the operator of a leading electronic trading platform for U.S. and European high-grade corporate bonds, emerging markets bonds and other types of fixed-income securities, filed its application on Friday July 12, 2013 to become a swap execution facility (SEF) under the Commodity Futures Trading Commission’s (CFTC) Dodd-Frank Act.

“We are pleased that the CFTC has finalized SEF rules and we welcome their oversight of our rapidly growing CDS electronic trading platform” said Rick McVey, CEO of MarketAxess. “As an independent electronic trading network with a broad institutional client network and a wide range of trading protocols, we believe that MarketAxess is ideally positioned to facilitate regulatory objectives to create a more transparent and competitive OTC swaps market.”

The public and regulators have benefitted from reporting to swap data repositories and reporting to the public.

“Starting in August, facilities called swap execution facilities will start so that the public can benefit from greater openness and competition before the transaction occurs,” CFTC chairman Gary Gensler said in opening remarks at the agency’s hearing on cross-border swaps regulation Friday. “And by the end of this year, there are likely to be trade execution mandates for interest rate and credit derivative index products, as well.”

In order to more effectively help its clients comply with the clearing mandate under Dodd-Frank, MarketAxess will support multiple pre-trade credit checking methodologies that will ensure certainty of clearing for clearable swaps traded over the platform.

MarketAxess specializes in electronic trading of credit instruments and was the first platform to offer electronic trading of credit default swaps (CDS) in 2005.

For Derivatives Clearing Organizations (DCOs), Futures Commission Merchants (FCMs) and Swap Data Repositories (SDRs), MarketAxess facilitates workflows and offers significant operational efficiencies to, providing the institutional credit community with more effective ways to execute and clear CDS products.

Over the past three years, since passage of the Dodd-Frank Act, MarketAxess has expanded its functionality to offer a comprehensive range of trading protocols including request for quote/market (RFQ/RFM), click-to-trade (CTT) and a central limit order book for CDS trading.

The platform currently offers electronic trading solutions in CDS Indices, CDS Index Options and CDS Single Names alongside its capabilities in electronic trading for corporate bonds and other credit instruments.

MarketAxess also offers a number of trading-related products and services, including: market data to assist clients with trading decisions; connectivity solutions that facilitate straight-through processing; technology services to optimize trading environments; and execution services for exchange-traded fund managers and other clients.

Through its Xtrakter subsidiary, MarketAxess also offers a range of pre- and post-trade services, including trade matching, regulatory transaction reporting, and market and reference data across a range of fixed-income products.

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