Despite the government shutdown and last-minute scurrying to finalize swaps execution facility (SEF) documents and iron out tech glitches, there were no major breakages on October 2, according to buy-side firms polled by TABB Group.
As per the survey conducted to get a snapshot of activity on this long anticipated first day of live trading through SEFs, Day One was considered a success.
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Although trading was largely uninterrupted, trade sizes remained in line with the over-the-counter (OTC) market and a fair percentage of the market traded bilaterally, off-facility as blocks, says TABB’s director of fixed income research Will Rhode who co-wrote "Swaps Execution Facilities: Day One" with research analyst Valerie Bogard.
Valerie Bogard, research analyst, said: "With the market largely adopting a wait-and-see attitude on Day One. 78% of the buy-side firms we polled said they chose to avoid the SEFs, although as many as two-thirds plan to become active on SEFs before the end of the year once the temporary relief of pre-trade credit checks expires on November 2 and the Made-Available-to-Trade rule and mandatory trading requirements go into effect."
Survey results are based on polling of over 40 US buy-side firms – asset managers, hedge funds and regional banks representing more than US$13.6 trillion in AuM.
Respondents were drawn from trading, operations, IT, risk and compliance departments. The report covers data provided by the DTCC as well as TABB analysis of aggregated trade report data supplied by the SEFs plus industry perspectives and what they will mean ultimately for the swaps market.
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By GlobalDataSurvey questions and data included:
- Respondent by type, size and function.
- Will you trade any products on SEFs today?
- Have you on-boarded with any SEFs?
- Have you paused swaps trading because of the SEF go-live date?
- Do you have a sense for market volume?
- When will you start trading on a SEF?
- Will you trade swaps futures instead of swaps?
- CME Group Deliverable IR Swap Future Historical Volume/Open Interest
- Eris Exchange Deliverable Swap Future Historical Volume/Open Interest
- Cleared trades, blocks and average trade size
- SEF Volumes – Rates
- SEF Volumes – Credit
- D2C vs. Interdealer Aggregated SEF Share
