CFTC Approves Swap-Execution Facility Plans for ICE, TrueEX

The U.S. Commodity Futures Trading Commission approved applications from TrueEX Group LLC and IntercontinentalExchange Inc. (ICE) to operate swap execution facilities.

The two trading systems join other companies that have already won temporary approval to run SEFs, including Bloomberg News parent Bloomberg LP, MarketAxess Holdings Inc., GFI Group Inc. and TeraExchange LLC, according to the regulator’s website, which lists a total of 18 applications. CME Group Inc., the world’s largest futures exchange and an ICE rival, said this week it applied to form one.

The Dodd-Frank Act of 2010 has provisions designed to shift swaps, which helped fuel the 2008 credit crisis, from largely unregulated transactions negotiated off exchanges to more transparent trading on systems including SEFs, which the CFTC and U.S. Securities and Exchange Commission oversee. The companies are seeking to tap into that market after the CFTC completed rules governing the trades in May, opening up competition in the $633 trillion over-the-counter derivatives market.

The requirement that swaps trade on SEFs becomes effective on Oct. 2. Before trading can start on a SEF, the operator must submit a request to the CFTC for the specific swaps it wants to offer, known as a made-available-to-trade application. That process may take up to 90 days to receive CFTC approval.

To contact the reporter on this story: Matthew Leising in New York at mleising@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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