Definition of swap execution facility sef

Swap execution facilities, or Sefs, are electronic trading platforms for over-the- counter (OTC) derivatives. Sefs were mandated by US Dodd-Frank Act, one of the aims of which is to reform derivatives trading by bringing the $6tn business onto Sefs and then sending the trades through clearing houses.

 

Sefs in the news

In April 2013, Bloomberg, the financial news and information provider, filed a lawsuit against the Commodity Futures Trading Commission (CFTC) in order to prevent exchanges gaining an edge in the battle over how derivatives will trade under new rules. 

The legal action came after many in the swaps industry had raised concerns that the CFTC was pushing the trading of OTC derivatives towards exchanges, rather than the Swap Execution Facilities (Sefs) created as a result of Dodd-Frank.

The difference in trading costs between swap futures and OTC swaps transacted on Sefs has been a hot topic of debate within the swaps business. 

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