By Margaret Scullin
The Commodity Futures Trading Commission (“CFTC”) will hold two upcoming meetings to discuss issues related to swap execution facilities (“SEFs”) and the trade execution requirement, which will commence with the effectiveness of the first made-available-to-trade (“MAT”) determination on February 15, 2014.
The first meeting will be held by the CFTC’s Technology Advisory Committee on February 10, 2014. The afternoon session will address MAT determinations and other SEF issues, including cross-border concerns and clearing issues. The clearing discussion will cover the CFTC’s requirements for pre-trade credit checks and guidance that swaps executed on SEFs that fail to clear should be void ab initio (discussed in previous posts, such as here). The meeting agenda is available here.
The CFTC will hold a public roundtable on February 12, 2014 to discuss the application of the trade execution requirement to multi-legged or “package transactions”. Various market participants had raised concerns about subjecting a swap to the trade execution requirement when it is part of a larger transaction involving one or more other swaps that are not subject to the trade execution requirement. In certifying the first MAT determination, the CFTC stated that swaps part of package transactions would not be exempt from the trade execution requirement but committed to holding a public roundtable to examine the issue in more detail and determine if and to what extent relief would be appropriate. The agenda for this roundtable is expected to be published soon.
Clarification of these open issues will be welcome. However, any changes to the trade execution rules will be challenging for SEFs and participants to implement prior to the start of mandatory trade execution within days after these meetings are held.