Last week, Javelin submitted a long list of MAT Swaps, whilst TrueEX submitted a list of actively trade benchmark swaps.
TradeWeb recognising market sensitivity, also goes for the benchmark listing for their MAT determination, stating that:
“It is in a unique position to observe and quantify market participants’ electronic trading behavior. Due to the breadth of institutions participating on our platforms and the metrics that we can capture from the activity on our platforms, we have been able to develop a very clear picture of the electronic execution of swaps, which allows us to quantify the trading experience of both liquidity takers and liquidity providers”.
They also recognise that:
“A determination that a swap has been MAT has significant implications because it subjects those swaps to the mandatory trade execution requirement under the Dodd-Frank Act. Accordingly, while we are supportive of the migration of mandatorily cleared swaps onto regulated platforms (and such migration is in our commercial interest), we believe it is critically important that SEFs and DCMs treat the MAT determination process responsibly so that swaps subject to the trading mandate actually meet the enumerated criteria, and the trading mandate is not unnecessarily disruptive to the marketplace and market participants. To that end, we considered the six enumerated MAT factors in light of the activity we have observed on our platforms and in the marketplace to make our initial MAT determination.
The list of instruments they will determine are as follows:
CDS (CDX and iTraxx): 5Yr On The Run (OTR)
IRS: EUR, USD and GBP benchmarks from: 2y,3y,4y, 5y,6y, 7y, lOy, 15y,20y,30y
Below are the six factors that the CFTC states should be considered when making a MAT determination, were covered in an earlier post, where I asked whether the CFTC had devolved too much market power the SEFs.
1) Whether there are ready and willing buyers and sellers?
2) Frequency and size of transactions
3) Trading volume
4) Number and types of market participants
5) Bid/ask spread
6) Typical number of resting firm and indicative bids and offers.
The TradeWeb MAT list covers CDS and IRS as follows:
Full submission document available here