Timothy Massad Discusses SEF State of Affairs at SEFCON VI

In his keynote address at the SEFCON VI conference on October 26th, CFTC Chairman Timothy Massad reemphasized his commitment to SEF growth.  He explained that his overall goal is to “create a regulatory framework that not only implements the trading mandate and achieves the basic goals of transparency, fairness and integrity in trading – but also one that creates conditions in which participants want to trade on SEFs.  A framework that provides a foundation on which the market can thrive and grow.  

Following were some of the key points he emphasized in charting a course to achieve that goal:  

• Current State of Play: Citing data from Clarus, Massad noted that for the first three quarters of 2015, 73% of credit default swaps and 69 percent of interest rate swaps were executed on-SEF.
• Permanent SEF Registration Status:  Currently, 22 SEFs are temporarily registered with the CFTC, and Massad said he and his staff will soon make recommendations as to whether to grant the platforms permanent registration status.
• Fine-Tuning Rules and No-Action Relief: Massad outlined the various components of SEF-related regulation for which no-action relief has been extended. These include Package Transactions, Block Trades and SEF Confirmation Data Reporting, in order to fine tune the rules to the realities of the marketplace.
• Next Steps: Some the top items the CFTC is working through are the MAT or “made available to trade” determination process, guidance on straight-through processing and post-trade affirmation, SEF oversight and data reporting.
• Cross-Border Equivalence: Massad stressed that one of his top priorities is to shorten the process when it comes to how different global regulatory agencies recognize each other’s trading platforms. Citing ESMA’s success in publishing the MiFID II technical standards as a significant step forward, Massad said that mutual recognition will be a “key focus of the CFTC’s activity next year.”

To read Chairman Massad’s full speech, click here.