Jodi Burns of Thomson Reuters looks at the need for greater harmonisation in the Sef back office.
launch of Swap Execution Facilities (Sefs) has represented a
milestone for the derivatives market.
Buy- and sell-side firms are focusing on transitioning to a
new market structure, with new forms of connectivity and
workflows aimed at bringing transparency, standardisation and
automation to the market.
almost eight weeks since their introduction at the time of
writing, a great irony has emerged. One of the core principles
behind Sefs was to create greater transparency in the swaps
market. According to the Commodity Futures Trading Commission,
Sefs must "make public timely information on price, trading
volume, and other trading data on swaps to the extent
prescribed by the Commission".
However, the CFTC has not been explicit in exactly how Sefs
must calculate and report their volumes. Instead, calculation
and reporting methods have been left to the Sefs' discretion
which has made it impossible to view volume data and draw any
meaningful conclusions and comparisons.
This in turn has led to a confusing and fragmented view of
swaps trading, the antithesis of what regulators set out to
achieve when implementing Dodd-Frank regulation.
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