How banks can prepare for the introduction of SEFs
Both Dodd-Frank and MiFID 2 make it clear that single dealer
platforms do not qualify as a Swap Execution
Facility (SEF) or organised
trading facility. Therefore, the execution of derivatives
products identified in legislation that have been traded on
these platforms would move to an exchange or other venue.
They would have to
qualify in the US as a SEF or under MIFID as a Multilateral
Trading Facility (MTF) or organised trading
facility. Banks would thus lose the deal flow and execution
revenue for those products that qualify for central
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