Bowing to industry concerns, the CFTC has delayed a requirement that swap packages be transacted via swap execution facilities (SEFs), and has clarified that the mandatory SEF-based trading of interest rate swaps and index credit default swaps will begin on Feb. 15.
Mark P. Wetjen,
acting chairman,
CFTC
The commission’s Division of Market Oversight (DMO) adds that SEFs may facilitate the trading of swaps subject to the trade mandate, if executed as part of such a “package transaction,” only if the methods for executing such swaps comply with the trading protocols of the required transactions section of the commission’s regulations. SEFs can process swap packages if they have rules in effect that permit the trading of them under the terms of the relief, officials say.
The DMO staff will hold a public meeting on Feb.12 to review “potential challenges surrounding the execution of package transactions through SEFs or DCMs,” officials add.
As for the official launch of SEF trading, Feb. 15 is a Saturday and the Presidents’ Day holiday is on Monday, Feb. 17 in the U.S, making the real start date for SEF trading Feb. 18. With this in mind, the CFTC and the DMO have made the following decisions as of Feb. 10:
- A party to an anonymous trade executed on a SEF or designated contract market (DCM) cannot access information in swap data repositories in order to obtain the identity of its counterparty, officials say. This action was taken to protect the identities of counterparties trading via SEFs and to encourage anonymous trading on regulated platforms;
- The DMO also published a guidance clarifying that while the CFTC requires market participants trading on a SEF to consent to the SEF’s jurisdiction, such consent need not be obtained through an affirmative writing, officials say. DMO officials say that a SEF is in compliance if it states in its rulebook that any person initiating or executing a transaction directly or through an intermediary, and any person who benefits from such a transaction consents to the jurisdiction of the SEF.
- The DMO is also launching on the CFTC website a centralized list of swaps subject to the mandate, including the specific terms defining each such swap, officials say.
“As a result of the trade execution mandate, next week many swaps for the first time will trade on regulated platforms and benefit from market-wide, pre-trade transparency,” says Mark P. Wetjen, the acting chairman of the CFTC, in a statement. “These platforms promise to improve pricing for the buy side, commercial end-users, and other participants and add to liquidity by streamlining participation in the swap markets.”
SIX Financial Launches FATCA Service
Market data and services provider SIX Financial Information has just released an instrument classification data offering that targets the demands of the Foreign Account Tax Compliance Act (FATCA), officials say.
The Valordata Feed (VDF) will flag the status of instruments covered by FATCA. SIX Financial officials add that the service will identify the relevant instruments and classify them via scope, exempt grandfathered, or exempt short-term. In the future, SIX will monitor the grandfathered instruments for material modifications, leveraging its corporate actions data service for this compliance activity.
In addition to data at the instrument level, SIX plans to incorporate the Global Intermediary Identification Number (GIIN) – the US Internal Revenue Service (IRS) identifier for participating Foreign Financial Institutions (FFIs), officials say.
VDF issuer data will be linked to GIINs when they are published by the IRS, which is expected by June 2014, officials say. GIINs will also be cross-referenced with other entity level identifiers such as the Legal Entity Identifier (LEI) standard that already exists in the company’s database of global securities and issuer data.
FATCA withholding is slated to take effect July 1, 2014.
ISDA Debuts SwapsInfo Website
The International Swaps and Derivatives Association has launched the ISDA SwapsInfo (www.swapsinfo.org) site to distribute publicly reported price and transaction data on interest rate derivatives (IRDs) and credit default swaps (CDS) from the DTCC’s swap data repository service operated by DTCC Data Repository.
The data is available in a consistent format and via a consolidated time series for downloading and analysis, say ISDA officials. The website also enables the creation of interactive charts.
For IRDs, SwapsInfo facilitates daily volume-weighted average IRD prices (for select products) and trading volumes, measured by notionals and trade count, as of January 2013. The site also offers weekly notional outstanding and trade count for a range of IRD products since 2012, officials say.
For CDS, the website offers daily volume-weighted average CDS prices (for select products) and trading volumes, measured by notionals and trade count, as of January 2013. SwapsInfo also provides weekly market risk activity, measured by notional outstanding and trade count, for CDS single names and indices since 2010, officials add. The site also offers weekly gross and net notional outstanding and trade count for CDS single names and indices since 2008.
Westport Capital to Use Deutsche Bank’s Fund Services
Westport Capital Partners, a distressed real estate and securities investment firm, has awarded a fund services mandate to Deutsche Bank, officials say. Westport will be using the bank’s reporting services at the portfolio, fund, and investor levels, says Steven Russell, chief administrative officer at the investment firm.
Deutsche Bank’s fund services group has more than $200 billion in assets under administration. It offers administrative, custodial and banking services to hedge funds, private equity-real estate funds, fund of funds, ETFs, UCITS, and other alternative investment vehicles, officials say.
Leave a Reply