CFTC Commissioner O’Malia pleased with SEF performance, but sees room for improvement

CFTC Commissioner O’Malia pleased with SEF performance, but sees room for improvement

According to the Wall Street Journal, Commodity Futures Trading Commission’s Scott O’Malia seems content with how the swap execution facilities have been operating since they were instituted.

As a means to make the derivative market more transparent due to its role in the financial crisis of 2008, the CFTC had mandated that all trading must be done through what they called swap execution facilities, or SEFs. October 2nd was the deadline for all trades to transition over to these new facilities.

Since opening, the SEFs have been involved in around $462 billion dollars in interest rate swaps and about $26 billion dollars in credit derivatives. Of this trading, close to half of it has been done electronically, with the other half being traded over the phone or by other means.

O’Malia, who was named commissioner of the CFTC in 2009, has stated that there have not been any significant issues to date, though they were having difficulty getting consistent data on just how many trades have been executed through the facilities so far.

O’Malia did seem concerned about the structure of the U.S. swap market, fearing that it may begin to resemble the fragmented nature of the U.S. stock market. He also hopes to see credit checks being built into the platforms to guard against traders putting themselves in overly risky positions, though he is aware that this will take time.

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About The Author


Elan Mendel

Elan Mendel

Elan Mendel is an associate with Shipkevich PLLC, and has done registration, compliance, and enforcement defense work for commodities, futures and forex firms registered with the CFTC and NFA as FCMs, RFEDs, and others. Elan also specializes in domestic and cross-border insolvency issues.

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