CFTC Gives Three-Month SEF Relief to Packaged Swaps
![cftc-hq cftc-hq](/sites/default/files/styles/landscape_750_463/public/import/IMG/709/167709/cftc-hq-580x358.jpeg.webp?itok=q-cDINPp)
Under the CFTC's process for introducing SEFs, the market utilities themselves are allowed to determine which instruments will trade electronically by submitting a request for certification to the regulator. Market participants and commentators, however, have raised concerns that packaged swap transactions with multiple legs may cause conflict, given that some include instruments such as futures that would be included in the mandate. Having to break up the execution, participants said, would introduce expense and complexity.
The CFTC will allow a 90-day period of exemption for a solution to be reached, acting chairman Mark Wetjen said yesterday, at a meeting of the Technology Advisory Committee (TAC).
"This relief is proof that it is never too late to do the right thing and take a first step to fix our broken rules," said Commissioner Scott O'Malia, in a statement following the meeting. "I previously raised serious concerns with the MAT process. This process does not provide the Commission or staff with a means to consider issues such as package transactions before a MAT determination becomes effective. I am pleased that the Commission staff will review all possible package transactions for technological, operational, and jurisdictional issues. The roughly 90 day no-action relief will provide staff with the time to perform the necessary analysis."
As the CFTC has approved several MAT determinations from SEFs, certain instruments will begin executing electronically from February 16. The regulator advised in the TAC meeting, however, that as this date falls on a Saturday, February 18 will be the practical implementation date.
This relief is proof that it is never too late to do the right thing and take a first step to fix our broken rules. - Scott O'Malia, CFTC.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Regulation
Northern Trust offers internal fund accounting, data tools to clients
Regulations and a mandate to enhance quality and transparency in a bid to improve the investor experience are pushing buy-side firms to have more oversight of their third-party providers.
EU firms press for faster move to T+1 after smooth US rollout
Following the example set by North America, 70% of attendees at a European hearing on shorter settlement cycles favored a Q4 2027 switch to next-day settlement.
Finra clears hurdle with CAT launch, but several others remain
Two major components of the consolidated audit trail are now in place. But wrangling over the CAT’s future continues.
Bloomberg, industry bodies push back on Cboe’s proposed OEMS rule change
Some industry bodies disagree with the options exchange’s proposal to carve its Silexx OEMS out of the SEC’s definition of an exchange facility and place it into a separate business line.
GenAI: US Fed reveals its five use cases
Internal sandbox used to assess viability and risks; coding and content generation on the agenda.
Zeros and ones: Industry contemplates T+0 as the next step
With the North American transition to T+1 settlement complete, same-day settlement could be the next goalpost set, though skeptics are many.
The IMD Wrap: Déjà vu as exchange data industry weighs its options
Max highlights some of WatersTechnology’s recent reporting on data costs and capacity issues facing the options industry, and asks, haven’t we seen this before somewhere?
FRTB data quality issues persist amid shifting implementation dates
Banks are finding market and reference data challenges posed by the FRTB’s standardized model tricky, compounded by uncertainty over when the regulation will take effect.