CFTC grants permanent status to 18 swaps platforms

Full registration for smaller swaps trading venues could remove uncertainty and open up liquidity.

The US derivatives regulator has granted full registration to 18 electronic swaps platforms, including those operated by CME, ICE, BGC, Bloomberg and ICAP.

The Commodity Futures and Trading Commission (CFTC) announced the full registration of the platforms two years after rules on swap execution facilities (SEFs) came into force. Prior to the announcement, these swaps trading venues operated on a temporary basis.

“These registrations represent continued progress toward the implementation of a new framework for trading on regulated platforms, as called for by Dodd-Frank and the G-20 leaders. It is bringing greater transparency, better price information and greater integrity to the process,” said CFTC Chairman Timothy Massad.

Despite the vast amount of SEF venues, interest rate swaps volumes have concentrated among a few big players. As of October 2015, ICAP’s IGDL, Tullet Prebon, and BGC held a combined 47% market share, according to data from Clarus Financial Technology.

However with this full registration, platforms which have only seen a fraction of trading activity could witness an increase in liquidity.

“The staff’s work was made unreasonably more complicated by having to apply the CFTC’s misconceived swaps trading rules to the distinct liquidity characteristics, long-established market practices and sophisticated market structure of the global swaps markets,” said CFTC Commissioner J. Christopher Giancarlo.

“Yet, completing this registration process reduces uncertainty for market participants who have been served by temporarily registered SEFs for the past two plus years.”