US Derivatives Begin Electronic Shift

By Michael Mackenzie


Javelin Capital Markets said it had begun matching buyers and sellers of US dollar swaps for a fee through its SEF platform. The trades came a day before Sefs must register under a deadline set by the US Commodity Futures Trading Commission.

 “We are open for business and trading interest rate swaps one day before the mandate starts,” said James Cawley, Javelin chief executive.

Regulators have pushed the trading of derivatives such as interest rate swaps towards Sefs to improve financial stability and transparency, which became a pressing issue after the financial crisis.


Under Dodd-Frank, standardised swaps, where the bilateral credit risk between counterparties is mutualized via a clearing house, as happens for derivatives futures contracts, must transact on a Sef.


Javelin said that 13 of the 17 firms offering client clearing of interest rate swaps were available on its platform for their customers to trade.

Established interdealer brokers and trading venues including Icap, Bloomberg, Tradeweb and MarketAxess, and new vendors such as Javelin, have received approval for their Sefs, but some market participants say the industry is not fully prepared for moving into the new era of trading this week.


Ahead of the start date for Sefs on Wednesday, the swaps industry has gained more time to comply with a host of rules around their operation.

Some planned Sefs operated by Icap, GFI, Bloomberg and Thomson Reuters have received letters from the CFTC allowing them to delay implementation of some rules.

European regulators have also asked the CFTC to delay its Sefs rules, to prevent the US extending its regulatory reach overseas and hampering operation of foreign trading platforms that involve the participation of US banks.