CME Joins List of Approved SEFs

CME, the world’s largest financial derivatives exchange has been granted temporary Swap Execution Facility approval by the CFTC. The CME


The U.S. Commodity Futures Trading Commission (CFTC) reported that it has granted the Chicago Mercantile Exchange (CME) temporary registration as a Swap Execution Facility (SEF). The Chicago-based futures and options exchange is the first entity to be granted SEF status post US-government shutdown.

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The CME SEF will offer a range of instruments through its CME Direct offering, a front- end multi-asset trading platform offering listed and OTC products.

The CFTC, a United States financial service watchdog, was given the responsibility to manage the newly formed Swap Execution Facility, an exchange-based trading venue for interest rate swaps and certain FX instruments. The CME becomes the second major exchange to be approved as an SEF.

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SEFs were introduced after the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was set in stone by the US government.

ICAP recently appointed former CME interest rates veteran, Laurent Paulhac. Mr Paulhac joined the world’s largest inter-dealer broker to manage ICAP’s SEF.

SEFs have come under fire from traders who feel the transparency factor is out of context, as SEFs offer little in the form of measuring trade execution to favour users. Unlike the securities market SEFs do not have best execution rules, therefore trading firms executing on SEFs have to make estimates on trading at the ‘best’ price.

Firms trading on SEFs were pleased to hear Ullink, a low latency provider of trading solutions to financial services firms has become a compliant FIX 5.0 provider.

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