New Swap Execution Facilities

There have been a couple noteworthy advances in SEF’s in July.  The NEX SEF has launched, and LedgerX has been approved.  Let’s have a look at these.


We’ll start with the bitcoin venture LedgerX, who applied for SEF registration in January 2017 and was approved on July 6.  They put out some press in May about their Series B financing of $11.4 million, with their vision to build a bitcoin options market.  This includes both the trading venue (SEF) and clearing house (DCO).  It’s quite intriguing stuff, and you can read all about it on their website, along with blog-commentary such as how running a startup company is more like Blackjack than Poker.

However, if you are itching to trade your first bitcoin option, you might need to hold tight.  There seem to be some major caveats in the CFTC registration document:

  • LedgerX also requested to be a DCO, but that is not yet granted
  • LedgerX cannot list a cleared swap (option) until it has a clearing agreement with a DCO
  • LedgerX cannot list a non-cleared swap (option) unless it changes its rulebook and gets further approval

So there you have it, they can operate as long as they don’t list cleared swaps or un-cleared swaps.  But they can exist, blog, and call themselves a SEF.


If you followed the ICAP-TP merger last year, it went something like this:

  • TP acquired the voice business of ICAP for £1.3bn
  • The Fin-Tech portions of ICAP (EBS, BrokerTec, TriOptima, etc) went into a new company called NEX

The new NEX company is a consolidation of services around the trading lifecycle.  If you read their annual report or their Strategic Guide, they’re positioning themselves as pre-trade, execution, and post-trade services.  Quite different to the classic brokerage model.

NEX applied for its SEF back in May of 2016 and it was formally approved on April 20, 2017.  They launched on July 3rd.  So let’s see how that went.

The chart below is from SEFView and shows all NDF activity in millions of USD per week, over the past 5 weeks.  NEX is the orange slice that shows up in the most recent week:

NDF SEF Activity over previous 5 weeks (June 5 – July 11)

If we then look at just the most recent week (NEX’s first week), and only at the 8 Currency Pairs they have brokered, we get an encouraging story:

NDF activity in select ccy pairs. Week of Jul 3 – Jul 7

This seems to tell us that they brokered the most USDKRW last week out of all of the SEF’s.  In fact, within these pairs, only ICAP and TP’s SEF have more volume.  So, off to a good start.


You can keep an eye on their progress with SEFView.  And we’ll be ready to watch the first bitcoin option trade on SEF.

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