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Swap Trading Rule Enforcement Begins to Trickle In
By Nik Venema | January 13, 2014

A leading electronic swap trading platform provider, Javelin Capital Markets LLC, is now closer to fulfilling the process required to list swaps in compliance with the CFTC’s new rules. The firm recently completed filing its request to the CFTC, after which there is now a 90 day approval period. Following that, if accepted, Javelin will be one of the first firms to offer users the ability to trade certain types of swaps in line with 2010 Dodd-Frank Derivative rules, meaning they must be completed through a swap-execution facility (SEF) or futures exchange. Javelin’s implementation of these rules marks the beginning of the CFTC’s enforcement which is expected to come in full steam in February.

We are still in the preliminary stages of SEF trading, and many users are “testing the waters” since they officially launched in November, starting with impressive trading volume at an average of 1200 trades daily. It’s clear now there’s no going back, and we can expect to see more and more requests for swap listing by platform providers. Meanwhile, many institutions, especially those from the banking sector are choosing to “see no evil, hear no evil”, in other words maintaining that if they don’t believe in the rules, they won’t take place. While some are wise to carry on their wait and see attitude, they may be at greater risk when it’s time to play catch up with the rest of those already accustomed to the SEF structure.