Bloomberg's swap-execution facility is backing industry wishes to focus on just the more liquid derivatives for now and has issued a "made available for trade" submission to the Commodity Futures Trading Commission to reflect that. Bloomberg's MAT plan includes interest-rate swaps and credit default swaps.
Javelin Capital Markets has asked the Commodity Futures Trading Commission for permission to make a broad range of interest-rate swaps available for trading on its swap-execution facility. Agency approval would trigger a CFTC requirement that all swaps of this type would have to be traded on SEFs such as Javelin. "This is a natural next step for a derivatives marketplace," said James Cawley, Javelin's CEO, adding that it "jump-starts trading on SEFs."
Industry participants say recently implemented U.S. rules for swap-execution facilities will lead to regionalization because European players likely will drop U.S. clients, rather than take necessary steps to become an SEF. The situation could have a profound effect, given that more than half of the volume on some European platforms for credit default swaps and interest-rate swaps involves U.S. banks and broker-dealers.
MarketAxess and GFI Group have received approval from the Commodity Futures Trading Commission to operate as swap-execution facilities, bringing the number of CFTC-approved SEFs to five. MarketAxess will transact credit default swaps. GFI will execute swaps in commodity, energy, equity, fixed-income, foreign exchange and interest-rate markets.