Swap Execution Facilities – The Business Landscape


Swap Execution Facilities (SEFs) are emerging from the Dodd-Frank Act, this research forecasts how the market structure for swaps trading might develop and presents how the emerging SEFs will evolve by asset class. While this regulation is set to improve market transparency, both the buyside and sellside will need to ensure connectivity is maintained or new lines are established in order to retain their access to liquidity, ultimately retaining profitably during this transition. Both the buyside and sellside need to determine which SEFs will provide the capabilities they need in order to continue to execute swap transactions after Dodd-Frank. Our report provides the guidance needed to make these assessments with an in-depth analysis of 12 leading SEFs.

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This report looks at the current and planned landscape in a cleared swaps market, assessing the SEF venues competing to execute cleared swaps and the likely market structure and evolution across asset classes. In all, the report has analysed the offerings of 52 potential SEFs, with the focus on the top twelve.

We outline the extent of product coverage in this report, maintaining that there are only a handful of true multi-asset providers. The report then goes on to present the gamut of SEFs who will operate in either a D2D or D2C tier, and also covers those who will provide order, quote, stream or click-to-trade functionality.

This first report in a series of three exploring the emerging SEF landscape examines the functions of 12 SEFs, identified as the best in class based on product coverage, volumes, current market share and positioning, from a pool of over 50 potential SEFs.

Published on: 24 Jul, 2012

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Swap Execution Facilities: The Business Landscape  — Table of Contents

  • 1.0 SEFs – the Basics
    • 1.1 DFA Moves Swaps to SEFs and Exchanges
    • 1.2 Three Categories of SEFs
  • 2.0 DFA Changes the OTC Market Structure for Swaps
    • 2.1 SEFs Are Planning to Support CLOB Market Structure
    • 2.2 DFA Implementation Timeline
    • 2.3 Expected SEF Trading Market Architecture
  • 3.0 SEF Coverage by Asset Class
    • 3.1 Credit
    • 3.2 Rates
    • 3.3 Foreign Exchange
    • 3.4 Equities
    • 3.5 Commodities
  • 4.0 SEF Functional Assessment
    • 4.1 SEF Trading Model
    • 4.2 SEF Pre-trade Risk Management
    • 4.3 Reference Data Management
    • 4.4 Market Data
    • 4.5 Quote Management
    • 4.6 Order Management
    • 4.7 Execution Management
    • 4.8 Regulatory Reporting
    • 4.9 Post-trade Considerations
  • 5.0 Related Research