The Futures Industry Association (FIA) has published a set of recommendations to improve trading on swap execution facilities (SEFs) and central clearing.
Both practices were introduced as part of new market-wide regulations, but have come under fire for a range of flaws.
In response to low trading volumes on SEFs, which have been slower to gain traction than many in the market had envisaged, the FIA has proposed improvements around enriching trade status messages, standardising content of trade records, implementing kill switches, and developing bunched order allocation tools.
For derivatives clearing organisations, the association added there should be processes to assist clearing members with limit screening, enriching clearing status information and bunched order allocations, and standardising trade data.
“Since the passage of Dodd-Frank, our industry has worked extraordinarily hard to build a new infrastructure for the central clearing of OTC derivatives,” said Walt Lukken, president and chief executive officer, FIA.
“The challenge before us now is to bring down the operational costs of trading and clearing swaps so that more clients can benefit from this new market infrastructure. Today’s paper highlights several areas where we can work together as an industry to achieve meaningful progress towards greater efficiency in our trading and clearing processes.”
The report was compiled by the FIA Cleared Swaps Operations Committee, which was formed in 2014 and includes representatives from more than a dozen clearing firms.