With the CFTC’s approval of the SEF rules last Thursday, swap users and would-be SEFs are targeting early December as the time when all swap users will be transacting standardized swaps on SEFs.
According to Reuters, the exact date is still a moving target until the CFTC publishes the rules in the Federal Register. Reuters reports that many firms expect December 9 to be the exact date, citing the final phase of the clearing mandate on September 9 as the key date.
At this point in time, sixty days after the CFTC publishes the rules in the Federal Register — which will likely be June 1 — these new would-be SEFs will receive provisional registration to execute standardized swaps while the CFTC reviews their applications.
Looking ahead, the next wave of the Dodd-Frank clearing mandate for over-the-counter derivatives begins on June 10. Participants that are already clearing, or will begin clearing on June 10, will be executing SEFs before December 9 because the CFTC requires that firms must begin using SEFs 30 days after they begin clearing.
Since the final phase of the clearing mandate is set to take place on September 9, an early December date has been marked as the time when electronic execution and clearing of OTC swaps will begin operating in unison.