The debate about SEFs continued

Last week I posted a short summary of a Blog I found which dealt with the issues surrounding the new OTC legislation and the question of what is a Swaps Execution Facility (SEF).

I was amazed to see that my brief summary, was in the top three most watched blogs on FinExtra! Clearly, lots of us out there are seeking more information on what’s going on.

So, to continue with the same theme, I have just finished reading another excellent blog post by the same ‘StreetWise Professor’. This time he looks at a recent speech given by Jill Sommers, from the US CFTC (Commodities Futures Trading Commission) the regulator who will be charged by Congress with overseeing the new legislation covering SEFs.

The blog post is quite long, but it’s an excellent read, and again, I highly recommend it.

The StreetWise Professor argues that Congress deliberately chose NOT to define a SEF as a ‘Trading Facility’ (the term used in other legislation to define a “Designated Contract Market”, or what we would call an exchange). BUT, rather Congress defined a SEF as “a trading system or platform”. So, he argues that a Trading Facility could be a SEF, but a SEF does NOT have to be a trading facility.

So, the prof’s view is that Congress has in effect defined what a SEF is NOT, ie it’s not an exchange, but have left open exactly what it is!

Confused? Join the club

More to follow…

4 Responses

  1. Thanks for the plug, guys. I plan to write a lot more about related subjects in coming days. Frank-n-Dodd is a never ending source of material, sad to say.

  2. Hardly a suprise – they are letting the CFTC/SEC do the leg work and figure out what this should actually be through the rule making process. If you want to know more dial into one of the roundables – the fog is already starting to lift on this one expect some draft rules out shortly.

  3. Hi Coleman

    I think these might be what Sam is talking about:

    Panel 1:

    Panel 2:



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