This past week we had the inclusion of TrueEx’s MAT into the CFTC list of required trades under the execution mandate. The CFTC seem to be doing a good job collating the list of required transactions into a table, found on their website here. Consulting firm ETrading Software has also done a good job providing their more in-depth summary of the MAT applications here.
Me, I’ve maintained a personal list which I share below, as this nicely summarizes in one picture what has been MAT’d, as well as when we can expect any further news from the CFTC.
So we’re due to hear about the Tradeweb MAT application imminently. This one will be interesting as it will include GBP interest rate swaps, and the Credit Derivatives it covers are a superset of the MarketAxess and Bloomberg applicatons that come later. I don’t see any surprises here, I’d expect both to get the rubber stamp.
As discussed last week, the primary indecision that remains is the handling of packaged transactions. The guidance has been that any required transactions, even if part of a package, fall under the execution mandate. The CFTC was due to have a roundtable on the topic earlier last week, but I believe was cancelled due to the storms we’ve been having. Another CFTC meeting due for that day, the Technology Advisory meeting (or is it the same meeting?) is rescheduled for February 10. Could the CFTC possibly wait until just 5 days before the effective date to discuss the topic? Probably.
NUMBERS
Lets have a look at last weeks numbers. The only anomoly here is the large IRD activity that went across BGC on Monday. By drilling into that number (using the SEFView application below), we’re able to see it was two large swaption trades which we are curiously trying to corroborate with the SDRView data for that day.
CHARTING THE DATA
Glancing at the numbers above, I was interested to see the CRD activity apparently take a nice jump. I plotted the total activity from the first full week of SEF implementation. The axis on the left is for IRD and the right-hand axis is FX and Credit. All product types (including FRAs) are included here. A few things can be seen:
- There was a seasonal dropoff for the holidays across all asset classes
- Credit derivatives activity had a significant start, only to come back within the past couple weeks
- FXD really only took off early November, coinciding with the realization in the market that anything touching a US Person (including your broker) means its subject to the CFTC execution mandate
- There seems to be a bit of momentum to the upside
We’ll be back next week with more news, and data.
Hello Tod – great and timely blog. Any market color on Commodity on-SEF trade volumes/notionals and associated trends?
Hi Rob. Only comment on commodities is the lack of reported activity. We’ve been maintaining the data, however the data is very thin. Bloomberg has the occasional swap, as do the IDB’s on occasion. IR and Credit have the MATs, and FX has the footnotes forcing trading onto SEFs. So I wonder if commodities are traditionally single-dealer transacted, and hence we have not seen the need to push onto SEFs? Would love to hear others’ opinions on this.