CFTC grants temporary registration to SwapEx, LLC, GFI Swaps Exchange LLC, and MarketAxess SEF Corporation

The U.S. Commodity Futures Trading Commission (CFTC) has approved the applications of SwapEx LLC, GFI Swaps Exchange LLC, and MarketAxess SEF Corporation for temporary registration as swap execution facilities (SEFs) pursuant to section 5h of the Commodity Exchange Act and section 37.3(c) of the Commission’s regulations. By becoming SEFs, these facilities will be able to offer regulated products, including foreign exchange options and non-deliverable forwards. As of September 16, 2013, there are only fifteen trading organizations that have been granted temporary registration as a SEF.

A SEF is a category of CFTC registered entities created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to provide increased transparency in the OTC derivatives market. Under final SEF rules published in June, any person operating a platform on which more than one market participant has the ability to execute or trade swaps with more than one other market participant must register either as a SEF or a designated contract market (DCM).

Additionally, since SwapEx LLC, GFI Swaps Exchange LLC, and MarketAxess SEF Corporation all meet the SEF definition under CFTC final regulations, they are required to register as a SEF to provide a minimum trading functionality, which is defined as an “Order Book.” Order Book means an electronic trading facility, a trading system, or a trading platform in which all market participants in the trading system or platform have the ability to enter multiple bids and offers, observe or receive bids and offers entered by other market participants, and transact on such bids and offers.

SwapEx, GFI, and MarketAxess will be required to demonstrate continued compliance with all applicable provisions of the Commodity Exchange Act, the Commission regulations, and any future regulations, amendments, guidance, and interpretations issued by the Commission in order to obtain and maintain permanent registration.