Four UK-based multilateral trading facilities (MTFs) have been granted authorisation to operate in the US without having to register as a swap execution facility (SEF) with the derivatives regulator.
An amendment order issued by the US Commodity Futures Trading Commission (CFTC) exempts ICE’s Creditex MTF for credit default swaps, State Street’s Currenex and FX Connect MTFs, as well as the Thomson Reuters MTF.
All four MTFs will be added to the CFTC’s list of venues exempt from SEF registration, bringing the total number of exempt MTFs to 20 EU-authorised venues. Other firms currently operating without SEF registration in the US include Bloomberg, BGC Brokers, ICAP, Tradeweb, Trad-X, Tradition and Tullett Prebon.
The original order, first published in December 2017, saw the CFTC allow the European Commission to request that certain additional MTFs and OTFs are granted exemption from SEF status, although the venues that are exempt remain subject to certain CFTC regulatory requirements. Furthermore, the CFTC can only grant SEF exemption if it agrees that EU trading venues are subject to comparable supervision and regulation by financial authorities in the venue’s home nation.
The move was welcomed by both European and US authorities as it also ensured that certain trading venues in the US gain equivalence from MiFID II derivatives trading rules, and that EU counterparties can still trade derivatives subject to MiFID II on SEFs and designated contract markets (DCMs) venues in the US.
“European firms can continue trading in derivatives on US trading platforms and effectively hedge against risk, setting conditions for stronger growth in Europe,” Valdis Dombrovskis, European Commission vice-president in charge of financial stability, said at the time. “On the other hand, US firms can hedge their exposures on EU platforms, facilitating trade and exchange between the EU and the US.”