CFTC Certifies Available-to-Trade Determinations


In October, TW SEF LLC (TW SEF) and MarketAxess SEF Corporation submitted self-certified determinations that certain interest rate and credit default swaps are made available to trade (MAT) for purposes of the Commodity Exchange Act (CEA) and Commodity Futures Trading Commission regulations. The CFTC’s Division of Market Oversight has announced that TW SEF’s and MarketAxess SEF’s MAT determinations are deemed certified, meaning that all swaps covered by the determinations will be subject to the trade execution requirement in CEA Section 2(h)(8).

As a result of these certifications, certain credit default swaps and fixed-to-floating interest rate swaps referencing US dollar London Interbank Offered Rate (USD LIBOR), Euro Interbank Offered Rate (EURIBOR) and Sterling London Interbank Offered Rate (GBP LIBOR) will be MAT as of February 26, 2014. These swaps include: USD LIBOR swaps that have spot or IMM start dates with a par fixed rate and a tenor of 4 or 6 years; EURIBOR swaps that have T+2 start dates with a par fixed rate and a tenor of 4 or 6 years; GBP LIBOR swaps that have T+0 start dates with a par fixed rate and a tenor of 2, 3, 4, 5, 6, 7, 10, 15, 20 or 30 years; and untranched credit default swaps on the CDX.NA.IG, CDX.NA.HY, iTraxx Europe or iTraxx Europe Crossover indices with a tenor of 5 years.  

TW SEF’s MAT determination also covers certain fixed-to-floating interest rate swaps that were previously made available to trade (as reported in the Corporate and Financial Weekly Digest edition of January 24, 2014).   

Counterparties must execute swaps that are subject to the MAT determinations on or pursuant to the rules of a swap execution facility (SEF) or designated contract market. A swap subject to the MAT determinations cannot be executed over the counter unless one or both of the parties invokes a valid exemption from clearing for the swap, which also operates as an exemption from the trade execution requirement. MAT swaps executed on or pursuant to the rules of an SEF are “required transactions,” and therefore must be executed through either the SEF’s order book or request-for-quote system unless the swap qualifies as a block trade. 

TW SEF’s MAT filing, which was amended on November 29, is available here

MarketAxess SEF’s MAT filing is available here

The CFTC’s press releases are available here and here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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