Javelin Files to Trade Interest Rate Swaps, Spurring SEF Shift

By Silla Brush


     Oct. 18 (Bloomberg) -- Javelin Capital Markets LLC today filed for permission to list interest-rate swaps on its new trading platform, a move likely to accelerate the Dodd-Frank Act migration of U.S. swaps trading onto public venues.

     The New York-based swap-execution facility informed the Commodity Futures Trading Commission it intends to list interest-rate swaps in U.S. dollars, British sterling and Euros that last between one month and 51 years in duration. If those products are allowed to trade on one platform, other trading platforms would likely have to follow suit.

     The platform’s plan is subject to review by the Washington- based agency, which could decide to put it on hold before it takes effect in 10 days and seek public comment.

     James Cawley, CEO of Javelin, said in a telephone interview that the move “jump-starts trading on Sefs.”

     “This is a natural next step for a derivatives marketplace the already enjoys trade reporting and broad central clearing,”

Cawley said.

     The Dodd-Frank Act, the 2010 financial-regulatory law, seeks to increase access and price competition in the swaps market by having interest-rate, credit-default and other types of swaps trade on new swap-execution facilities. Largely unregulated swaps helped fuel the 2008 credit crisis and the U.S. rescue of American International Group Inc.

     Javelin said in its filing that swap dealers registered at the CFTC, which include Goldman Sachs Group Inc. and JPMorgan Chase & Co., already regularly act as buyers and sellers in the interest-rate swap market and would be willing traders on new platforms.

     Javelin SEF LLC is a subsidiary of Javelin Capital Markets LLC, a derivatives trading venue founded in 2009.