ICAP Launches Its Trans-Atlantic SEF, Regulated by Both CFTC and FCA

The world's largest broker responsible for interbank transactions has unveiled its SEF offering today which could help alleviate the liquidity-squeeze

icap-logoThe largest broker responsible for inter bank transactions, ICAP, has unveiled that it is launching its UK regulated Swap Execution Facility (SEF) under its UK subsidiary ICAP Global Derivatives Limited (IGDL). Last week the US Commodity Futures Trading Commission (CFTC) announced that it had granted a temporary SEF permit to IGDL, today ICAP launched its offering, complete with a Financial Conduct Authority FCA license.

The resulting SEF is the first to comply with both major regulatory environments in the EU and the US, making it the first SEF able to bridge liquidity flows across the Atlantic.

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Recently appointed CEO of ICAP’s SEF, Laurent Paulhac, commented in the press release: “The launch of IGDL is an important initiative for our clients and our markets, mitigating the risk of liquidity fragmentation. With this dually regulated entity, market participants from all key jurisdictions can participate in the same global liquidity pool for our G3 rates products.”

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IGDL’s current regulatory permissions permit its operations across the EU under the MiFID passport regulations as a Multilateral Trading Facility, bringing in EEA liquidity. IGDL is also authorized by the Ontario Securities Commission in Canada to complete the offering within North America.

The company concludes the press release explaining that it will continue efforts to get regulated in Asia-Pacific new regulatory environments to make the newly launched IGDL SEF interest rate swap offering truly global. It will initially focus on G3 Rates – USD, EUR and GBP through a variety of offerings including Interest Rates Swaps, Overnight Indexed Swaps and interest rates forwards and options.

The rest of the products will continue to be offered through ICAP’s active US SEF, ICAP SEF (US) LLC.

Meanwhile, the company has unveiled its full annual results which show that the firm maintains its solid position for brokering interest rate products. That said, bearing in mind the recently released FX volume metrics by Thomson Reuters’ FXall division, ICAP’s EBS keeps losing market share in its FX business.

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