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SEFs Evaluated as Dodd-Frank Deadlines Loom

By 25 Jul, 2012November 11th, 2019Press Releases

Cognito Europe

  • 52 proposed swap execution facilities analysed; 12 strongest players interviewed
  • Consultancy advises on product coverage and trading models

LONDON – 25th July 2012 – A new report from GreySpark Partners, the capital markets consultancy, first in a series of three, has revealed how the swap execution facility (SEF) landscape is set to look after the Dodd-Frank act. The functions of over 50 potential SEFs were analysed, and the most likely top 12 were identified based on product coverage, volumes, current market share and positioning.

“SEFs – the Business Landscape” forecasts how the market structure for swaps trading might evolve and presents how these venues will evolve by asset class. Under Dodd-Frank legislation, the Commodities Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) are responsible for OTC derivatives, demanding central clearing for certain swaps. Swaps subject to this clearing requirement will now need to either trade on exchange or via a swap execution facility (SEF).

Both the buy-side and sell-side will need to determine which SEFs will provide the capabilities they need in order to continue to execute swap transactions after Dodd-Frank. GreySpark’s report provides the guidance needed to make these assessments.

GreySpark outlines 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. It also identifies a general trend towards high throughput, low latency electronic Central Limit Order Book (CLOB) trading for rates and credit, with quote-based functionality still important for Dealer-to-Client (D2C) flows and complex FX and credit products.

Bradley Wood, Partner, GreySpark Partners, commented, “With competition in the SEFs landscape heating up, we wanted to pull apart all the proposed offerings and establish which venues are actually going to support the banks and come out strongest. What was really critical in this research was looking at how the influx of SEFs and regulation will change market structure”

The report also presents the relevant entities in the Swap Data Repository and Clearinghouse space so that firms can understand the full impact, front-to-back, of ensuring compliance with the Dodd-Frank act.

The research is a culmination of analysis on the capabilities of SEFs in the market, ranked by product coverage, volumes and current market share, and accompanied by commentary on observations and trends identified.

The series comprises of three parts: SEFs – the Business Landscape, SEFs – the Technology Landscape, and SEF Aggregation – Approaches, Pitfalls and Solutions.

For further information on GreySpark’s research, please e-mail: