Swap Execution Facility
Welcome to ICAP’s SEF information page.
ICAP has served OTC and exchange traded derivatives customers for many years by offering fair, liquid and robust markets. The regulatory framework that has been created in the US by the Dodd-Frank Act provides us with the opportunity to leverage our expertise in operating these markets and expand our services to create a Swap Execution Facility (SEF) encompassing a broad set of asset classes and currencies.
In advance of the SEF rule, we launched a number of electronic and voice/electronic hybrid platforms that will serve as the basis for many of our SEF products. We are dedicated to serving our customers and will help them to meet their regulatory obligations related to SEF trading.
ICAP is committed to our customers and in keeping them informed. We will continually update our website with new information as we progress with the preparations for SEF.
CFTC No-Action Relief issued on September 27th, 2013
The CFTC issued a no-action relief (the “Relief”) exempting SEFs until November 1 from certain obligations, notably the requirements to have and enforce a rulebook and to require its participants to consent to the jurisdiction of the SEF and to abide by the rulebook. This is intended to provide market participants and SEFs additional time to complete the onboarding process. For more information on the relief and what it means for you, please send an inquiry to our SEF mailbox at SEFcustomerinquiries@icap.com
ICAP as a SEF
ICAP has received approval for temporary registration with the CFTC as a Swap Execution Facility (SEF).
We are prepared to meet the CFTC Compliance date for both Required and Permitted transactions. ICAP completed the technological work, hired a Chief Compliance Officer for the SEF, posted a Rulebook and governance documents, and selected the SEF’s Board of Directors. Additionally, ICAP has been actively working to ensure that it can provide SEF participants with access to trading platforms designed to foster the most efficient and liquid markets. Likewise, ICAP is creating services that will assist its customers in fulfilling certain requirements under Dodd-Frank and CFTC Regulations.
Asset Classes of the SEF
ICAP’s SEF operates markets for Interest Rate Swaps (IRS), Credit Swaps (CDS), Commodities, Equity Derivatives and NDFs. ICAP offers trading in cleared and uncleared swaps.
Access to ICAP’s SEF
Existing ICAP voice and hybrid clients trading on their own account will in most cases will be able to apply to access the SEF via their existing ICAP broking entity relationships, which can place and execute orders on the SEF. Direct SEF participants may also choose to utilize these ICAP introducing brokers in order to provide access to traders in jurisdictions in which the SEF does not operate or to take advantage of their non-SEF services.
PLEASE NOTE: Existing clients seeking to continue trading swaps with ICAP must complete and deliver to ICAP a Customer Agreement for SEF Transactions by October 31st, 2013.
Clients seeking direct access to the SEF and clients who want to trade on behalf of their Customers can apply to become a Trading Privilege Holder on the SEF by submitting a Trading Privilege Holder Agreement. Additionally, clients trading non-deliverable forwards electronically on EBS should apply to become a Trading Privilege Holder.
Customers who expect to transact on the ICAP SEF via non-ICAP brokers should confirm that such brokers are, or intend to apply to become, Trading Privilege Holders on the ICAP SEF and that such brokers have the necessary regulatory authority to introduce your trades to the SEF. Customers may trade electronically on their own account through such non-ICAP brokers if such brokers offer direct market access (“DMA”) to the SEF.
Connecting to ICAP’s SEF
Participants can access the SEF in a variety of ways including via our trading applications, independent software vendors or through our published application programming interface. Additionally, approved Introducing Brokers will also be able to provide customers with access to the SEF. Participants may trade swaps on the ICAP SEF through any means of interstate commerce and we plan on operating central limit order books, Request for Quote (RFQ) systems, block trade capabilities and crossings.
ICAP’s SEF meets all requirements under Dodd-Frank for SEF executions including pre-trade certainty of clearing.
First, all participants to the ICAP SEF are required to either be a clearing member of a CCP or have an agreement with an FCM that is a clearing member of a CCP to clear the participant’s swaps transactions.
Second, all ICAP platforms provide users with tools to apply credit limits, fat finger controls, and other tools designed to assist participants and clearing firms to manage credit issues.
ICAP continues to work with key industry vendors to provide pre-trade limit management services.