After much anticipation, the CFTC passed final rules on the governance of swap execution facilities (SEFs) including rules on the minimum quotes required and swaps block rules.
Views vary on many elements of the newly approved rules with some industry participants believing the rules to be fair and others very problematic.
SIFMA immediately issued a statement following the vote to express the trade body’s disagreement with the final rules and concern that the new execution rules will “negatively impact investors and hinder the ability of American businesses to manage risk contrary to intent.” The statement specified the imposition of a minimum bid requirement for swap execution via SEFs as well as the methodology for the determination of block sizes as problematic. Full details via statement here.
Another area of debate is the number of request for quotes a customer must obtain from other banks. It was initially proposed that a customer must request quotes from at least five other banks but the final rule calls for two quotes initially (in the first 12 months), followed by an increase to a three quote requirement.
Now that the rules have been passed, we will see SEFs rush to set up shop and secure a piece of the market.
Coverage and analysis of the impact of these new rules will undoubtedly be debated in the coming weeks and DerivSource will provide readers with some in-depth analysis soon (sign up for email alerts to see articles first).
In the meantime, here are some articles covering the rules for your weekend reading.
Julia Schieffer, Editor – DerivSource.com
More reading:
More speeches from meeting: http://www.cftc.gov/PressRoom/SpeechesTestimony/index.htm
FT
http://www.ft.com/cms/s/0/ed765164-bda8-11e2-890a-00144feab7de.html#axzz2TTj4i2UA
