Swap Execution Facilities (SEFs)







A Swap execution facilities (SEFs) are electronic execution systems providing swap dealers anonymous execution capabilities.  The trouble with SEF’s are their services are varied, their connectivity.


An SEF should offer some value-add over transacting over the phone

1) An SEF needs to provide Straight Through Processing (STP) of all executed transactions.  Meaning once a transaction is executed on an SEF, the trade is:

a) submitted for clearance to CCP

b) notification sent to executing firms AND their Middle office

c) provide connectivity to internal systems at executing firms so an executed transaction seamlesssly connects with the internal systems of the executing firms.

2) The second “appreciable advantage” would be for an SEF to have market makes contributing prices.  The problem with having so many SEF’s is that this advantage becomes fragmented.

One way to minimize this fragementation is to find an SEF in which the larger swap dealers have an interest or are using.  That way, when prices are posted, there is somsone with the ability to transact watching the screen.

Liquidity begets liquidity.  One to Three SEF’s will capture the market prices race.  Let’s just hope it’s sometime soon.


Here are two links that may prove useful:

All SEF’s file with the CFTC for approval.  here’s the CFTC SEF link

The futures Industry Assocation (FIA) regulary issues their SEF Tracker which  You can find here.