Financial Intergroup Holding's Allan D. Grody on how technology can provide simpler, cost effective and geopolitcally savvy solutions to reporting swaps data.
In order to observe risk in the
OTC markets, the CFTC focused on regulating global swaps
activity. It set itself on a course that parallels existing
trading markets, a reasonable approach at the time.
It begins with the concentration
of swaps trading on trading venues similar to those that exists
for listed securities and futures. The concept is called a
swaps execution facility (SEF). For the moment they resemble a
price dissemination service rather than a trade execution
facility. Voice brokers and dealer trading systems interact to
set prices, execute trades and report them to an SEF.
Swaps-like futures products have traded on existing derivatives
exchanges for some time now and more are expected, actually
more are being precipitated by the CFTC’s new
swaps regulations. It is expected this will bring transparency
to swaps prices and perhaps spur new forms of liquidity
creation in traded swaps markets.
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