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ICAP Files SEF Application with CFTC As Oct. 2 Deadline Nears

The market operator said ICAP SEF will operate across multiple asset classes and offer trading through fully electronic or hybrid voice/electronic platforms.

ICAP plc, a leading markets operator and interdealer broker, today said its subsidiary ICAP SEF (US) LLC has filed an application to be a swap execution facility (SEF) with the Commodity Futures Trading Commission (CFTC) in compliance with the Dodd-Frank Act.

The ICAP SEF will operate markets across multiple asset classes, including interest rate swap (IRS), credit default swaps (CDS), equity derivatives, commodities and non-deliverable forwards (NDFs). ICAP will offer trading in cleared and non-cleared swaps and intends to operate central limit order books (CLOBs) and request for quote (RFQ) systems, as well as offer block block-trade capabilities, electronic crossing and execution via brokers, according to today’s announcement.

The move positions ICAP to establish an electronic trading venue that implements the final SEF rules passed by the CFTC in May of 2013. The final rules mandate that all platforms that intermediate on a multiple-to-multiple basis must register as a SEF by the compliance date of October 2.

John Nixon, Group Executive Director, Americas at ICAP plc has been appointed Chairman, CEO and President of the ICAP SEF, which will be headquartered in New Jersey.

“The filing of our SEF application is a milestone for our organization, but it is also very much a logical evolution of our longstanding efforts to serve the needs of the OTC derivatives marketplace,” stated Nixon in the release.

ICAP said it initially plans to offer trading in required transactions which are expected on the “made available to trade list” to include swaps on interest rates and credit indexes that are currently mandated for central clearing.

“ICAP has invested heavily in technology that has permitted it to offer customers the ability to execute transactions on a fully electronic basis or with the assistance of a broker,” added Nixon. In addition to operating markets, ICAP is a provider of post-trade risk mitigation and information services.

In advance of the SEF rule, ICAP launched a number of electronic and voice/electronic hybrid platforms that will serve as the basis for many of its SEF products, according to a SEF section on ICAP’s web site.

Participants will be able to access the ICAP SEF through ICAP trading applications and the platforms provided by independent software vendors or through the ICAP published application-programming interface (API). In addition, approved intermediaries will be able to provide their customers with access to the SEF, subject to its rules.

“With our expertise and experience in operating regulated markets, the quality of our technology, and the depth of our customer relationships, we look forward to our SEF serving as a leading facility for the trading of swaps in the new regulated landscape,” added Nixon in the release.

In filing with the CFTC, ICAP joins a list of top derivatives players that have filed applications to register their platforms as SEFs before the compliance deadline. In July, GFI Corp., MarketAxess, Javelin Capital Markets, and Tradeweb filed to register as SEFs. That same month, Bloomberg LP became the first entity to to be receive temporary approval to operate a multiasset SEF.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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