Global interdealer broker Tullett Prebon is the latest firm to apply to run a swap execution facility (SEF) to the Commodity Futures Trading Commission (CFTC).
The SEF, named as tpSEF and headquartered in New Jersey, will be a wholly owned subsidiary of Tullet Prebon.
The firm did not list which instruments it would trade, but its core brokerage offering centres around instruments for volatility, treasury, non-banking, energy and commodities, credit and equities.
Senior managing director of e-broking and member of Tullett Prebon’s North American Executive Committee, Shawn Bernardo, will take on the role of tpSEF CEO.
“Tullett Prebon’s SEF forms an important part of the development of our existing businesses as we continue to grow our global market leading offering in those areas regulated by the CFTC and SEC,” Bernardo said.
The Dodd-Frank Act will push most swaps trading onto SEFs and as such, the competitive landscape for these new venues will emerge as SEFs begin facilitating trading. Currently, the CFTC website lists 11 pending SEF applicants, with Bloomberg the only firm yet to receive provisional approval in July.
Pending SEF applications include GFI Swaps Exchange, ICE Swap Trade, INFX SEF, Javelin SEF, MarketAxess SEF, TeraExchange and TrueEX.
Some applications have listed which instruments will trade on their SEFs, although many are waiting for approval before releasing this information. DW SEF, for instance, has declared it wishes to trade in cash-settled interest rate swaps, while SwapEx has expressed interest in FX non-deliverable forwards.
Similarly, the clearing landscape for swaps will emerge as buy- and sell-side firms continue clearing OTC derivatives, which began this year. While some SEF applicants have listed preferred derivatives clearing organisations, including LCH.Clearnet, ICE Clear Credit and CME Clearing, most had not.