According to Traders Magazine, SEF registration rules may hinder movement towards multi-dealer platforms by forex traders.
The SEF registration rule, instituted by the US’s Commodity Futures Trading Commission requires all multi-dealer platforms to register as swap execution facilities. This may slow the growth of multi-dealer platforms, and, as found in a report by industry consultancy Greenwich Associates, may even cause multi-dealer platforms to consolidate.
As found in the Greenwich associates’ report, trading on multi-dealer platforms has risen six percent over the last five years, going from 38 percent in 2007 to 44 percent. Alternatively, single-dealer trading dipped seven percent in the same five years, going from 49 to 42 percent.
It seems safe to assume that the SEF registration rules will disrupt these trends, as traders will be more inclined to conduct business via single-trade platforms in order to circumvent the process altogether.
Greenwich Associates does state that this new trend may not be permanent, however. After the dust begins to settle over the SEF registration rule, the consultancy feels as though traders will begin to utilize multi-dealer platforms once again, though the volume may be spread over fewer players with many single company multi-dealer platforms consolidating together in order to mitigate the hassles that come with SEF registration.