Galen Stops looks at how SEFs are being disadvantaged by the US regulatory environment but argues that they will still serve an important function in the market.
There has been much discussion about Swap Execution
Facilities (SEFs) over the past year, what they will look like
and how they will function, but with the final SEF rules
expected before December, the conversation has turned to
whether they will be necessary at all.
The initial burst of enthusiasm for SEFs, in which it was
originally predicted that there would be around 40 of the
platforms, appears in many quarters to have well and truly
The reasons for this are that the regulatory uncertainty
that still surrounds SEFs has caused market participants to
head towards more familiar areas of the financial markets.
FOWi reported earlier this month that SEFs faced an
uncertain future with many market participants preferring to
instead trade on DCMs because they are a known and proven
platform and because of the "futurisation" of swaps that has
grabbed the industry's attention in recent months.
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