Swap Execution Facilities

The Asset Management Group (AMG) of SIFMA provides comments to the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) on core principles and other requirements for swap execution facilities (SEFs), RIN 3038-AD18.  SIFMA AMG conveys several observations and recommendations including: (1) the CFTC and SEC should harmonize their rulemaking efforts to promote consistent rulemaking; (2) the CFTC should adopt a more flexible approach towards trade execution other than just Request for Quotes (“RFQ”) and Order Book Systems; (3) the determination of whether a swap is “available to trade” should be made by the CFTC, not the SEF, based on well-defined, objective criteria; (4) SEFs regulatory authority should be limited; and (5) Complex combination swap transactions (i.e. swap with futures component) should be exempt from mandatory execution on a SEF because of their unique pricing, trading, and credit characteristics.