Kevin McPartland, of Tabb Forum has just released his end of year research report on SEFs entitled “SEF Industry Barometer: Fall 2011″, a sort of ‘SEF stocking filler’, and bound to be a hit for those heads of trading, stuck for last-minute gifts!
Tabb surveyed over 200 market participants, many of whom were uncertain over the benefits of SEFs.
However, when asked who they believed will be successful ultimately as a SEF in each asset class, the participants named the following firms: Bloomberg, CBOE, CME Clearport , CreditEx, FXAll, ICE OTC Energy , ICAP , MarketAxess and Tradeweb.
The list of winners, will be the IDBs, the cream of the current multi dealer platforms which will morph into SEFs.
However, it’s still far from clear that buy-side firms will actually benefit from the introduction of SEFs, as they face higher costs resulting from the introduction of CCP clearing and the requirement to post collateral and manage margining, as well as the potentially detrimental impact on their ability to access liquidity, through a fragmented market.
Some of the impact of fragmentation, will in our view be mitigated as banks provide their clients with SEF/OTF aggregation services as part of their single dealer platforms, as discussed here and here, and here.