07.29.2011
By Terry Flanagan

SEF Operators Say They’re Ready

Tradeweb appoints chief compliance officer in preparation for finalization of Dodd-Frank rules.

Operators of trading venues for OTC derivatives have been knee-deep in building out the necessary functionality to operate as swap execution facilities (SEFs) under new derivatives reforms enacted via the Dodd-Frank Act.

Tradeweb has been actively preparing for the registration of its current swaps platform as a SEF for more than a year. Among the initiatives completed in preparation for the new rules are electronic links to all the major clearing houses, integration with order management systems, development of “SEF-ready” trading protocols, and a legal review of requirements to rapidly complete SEF registration.

“Over the last two years, Tradeweb has introduced a number of protocol changes and enhancements to our global swaps platform,” Scott Zucker, chief administrative officer at Tradeweb Markets, told Markets Media. “We intend to be SEF-ready from day one.”

Tradeweb has expanded the number of contracts that can be traded electronically on its platform and has developed new functionality to meet the requirements of the rules proposed.

“We are supportive of derivatives markets moving toward regulated execution venues, the introduction of central clearing, and the increased transparency and efficiency that comes with the electronic trading of derivatives,” said Zucker.

Tradeweb has appointed Bob Paul, a former general counsel of the Commodity Futures Trading Commission, as a member of its global compliance and legal team. The move positions the firm with a seasoned CCO in place for its SEF, following finalization of derivatives regulation by the CFTC and SEC.

The goal is to provide a smooth transition for customers.

“Like other market participants, customers will need to adjust to potentially new trading rules and central clearing requirements, but with existing platforms like Tradeweb already providing electronic execution for derivatives, customers will have an easier transition to trading on SEFs,” Zucker said.

Although final rules implementing Dodd-Frank will not be in place by July 16, the SEC and CFTC are providing relief from certain provisions of the Act, a step welcomed by market participants.

“We believe the SEC and CFTC have taken the appropriate steps to prevent certain provisions of Dodd-Frank from becoming effective on July 16th, and thereby preventing a disruption to the current derivatives market,” said Zucker. “We are confident that with the appropriate implementation of the final rules, the transition to Dodd-Frank can be accomplished with minimal disruption.”

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