SEF Buildouts Continue

Terry Flanagan

With the Commodity Futures Trading Commission’s publication of final rules on swap execution facilities, operators of OTC trading venues are moving full-speed ahead with plans to launch SEFs.

Tradeweb Markets, a provider of fixed income and derivatives marketplaces, announced two wholly-owned subsidiaries that have applied for temporary registration with the U.S. Commodity Futures Trading Commission (CFTC) as Swap Execution Facilities (SEFs) in support of new derivatives trading regulations under Dodd-Frank.

To provide market participants with the greatest flexibility to trade interest rate swaps and credit default swap indices, the newly regulated marketplaces will operate on different technology platforms, offering a disclosed request-based market with an order book on one SEF, and a separate anonymous central limit order book through the other.

“Our SEFs will operate separate technology platforms that offer different derivatives trading methodologies, allowing market participants to execute strategies in different ways to meet their unique liquidity needs,” said Billy Hult, president of Tradeweb Markets.

Tradeweb has built a successful derivatives trading franchise over the past eight years, driving up overall performance throughout the trading workflow. “We believe our two SEFs provide market participants with greater flexibility to trade while supporting liquidity across efficient, electronic markets,” Hult said.

The publication of the U.S. SEF rules has reduced regulatory uncertainty and interdealer broker Icap remains on track to launch its SEF in readiness for their implementation.

“The CFTC’s publication of the SEF rules in the U.S. provided some long-awaited clarity about the future of our markets and reinforced our belief that we have positioned Icap well to adapt to the new regulatory environment and serve our customers effectively,” said Michael Spencer, group CEO at Icap plc, in a statement.

Since launching in 2005, the Tradeweb derivatives platform has executed more than $13 trillion in notional volume and over 145,000 trades. More than 20 liquidity providers and over 300 institutional clients currently participate across Tradeweb derivatives platforms for interest rate and credit default swap indices, accessing liquidity through request-for-quote (RFQ), request-for-market (RFM), click-to-trade (streaming prices) and order book trading protocols.

“Though SEF registration is a major step forward for the industry, the growing adoption of electronic trading of derivatives on Tradeweb has been a natural evolution for us since 2005,” said Lee Olesky, CEO of Tradeweb Markets. “We continue to see strong growth across our derivatives platforms, and Tradeweb remains committed to improving transparency and access to liquidity through flexible trading architecture and more efficient workflows.”

Focused on applying technology to enhance efficiency throughout the trade lifecycle, Tradeweb developed straight-through-processing in fixed income and now supports marketplaces for over 20 asset classes with electronic execution, processing, post-trade analysis and market data in an integrated workflow.

“By registering SEFs for separate request-based trading and an anonymous central limit order book, our marketplaces can support different customers’ unique strategies and liquidity needs,” said Hult. “As more market participants begin clearing and executing derivatives trades electronically under Dodd-Frank, Tradeweb customers will continue to benefit from increased efficiency across flexible, electronic markets.”

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