Earlier this month, the Commodity Futures Trading Commission announced that it would allow US persons to trade on European multilateral trading facilities without the MTFs having to register as swap execution facilities (SEFs) in an attempt to ease concerns over liquidity within the market.
However, platform operators seem to think that this new CFTC EC SEF agreement may not do much at all to keep liquidity between Europe and US markets.
It seems that, while traders from either country may now trade on either platform, the use of two separate platforms at all creates a bifurcation within the market, leading to a lack of liquidity between the two countries.
In order for US traders to be able to trade on MTFs, they must operate under certain standards that would be comparable to the US. Many platforms however, may not be willing to subject non-US traders to US regulations and may not bother qualifying, leaving US traders unable to use their platforms.
On top of this, some market participants are saying that the trading being done on MTF’s are currently not offering the types of swaps that would force a US trader to use them in the first place, meaning the CFTC EC SEF agreement will have no effect on the market.