CFTC Commissioner Scott D. O’Malia delivered a statement on Swap Execution Facilities (SEFs), explaining why he was “reluctantly” concurring with the decision of the Commission to approve the final rule. In his statement, O’Malia discussed how a SEF will allow market participants to access a more transparent market and offer innovative trading opportunities. Unlike the futures exchanges which are tied to a single clearinghouse, trades executed on SEFs can be cleared at different clearinghouses, which will provide a new competitive execution space, according to O’Malia. He also discussed what he felt were some of the problems with the SEF Rule:
- The Rule’s requirement to send a request for quote to three market participants is not supported by law;
- The Rule should have provided further clarity regarding voice execution; and
- The Rule should have provided clarity regarding exchange of swaps for related position transactions.
View Speech in full here (links externally to CFTC website).