The Commodity Futures Trading Commission (CFTC) has approved a European multilateral trading facility (MTF) to operate as a swap execution facility (SEF), the first non-US domiciled platform to be approved.
ICAP Global Derivatives Limited is based in the UK and will support European clients looking to trade interest rate swaps with US persons.
As European regulation of OTC derivatives trading is currently behind its equivalent regulation in the US, European firms that want to trade with companies or individuals deemed as US persons have been unable to trade without having a relationship with a US-based platform.
Today’s launch of ICAP Global Derivatives as a SEF will see a return to trans-Atlantic swap trading, though it remains to be seen whether there is appetite from European investors to use SEFs.
The SEF has been granted temporary registration, enabling it to operate, and will now be investigated by the CFTC to ensure it is fully compliant with swaps regulation before receiving its full registration.
ICAP launched its US-based ICAP SEF in September last year offering a broad range of interest rate swaps.