CFTC Issues Trade Execution Mandate for Certain Credit Default Swaps

The CFTC Division of Market Oversight ("DMO") certified MarketAxess SEF Corporation's ("MarketAxess") self-certification of certain credit default swap ("CDS") contracts that have been made available to trade ("MAT Determinations").

The CFTC stated that swaps which are subject to MAT Determinations, whether offered by MarketAxess or any other swap execution facility ("SEF") or designated contract market ("DCM"), will become subject to the trade execution requirement under CEA Section 2(h)(8) ("Jurisdiction of Commission; Liability of Principal for Act of Agent; Commodity Futures Trading Commission; Transaction in Interstate Commerce") 30 days after certification. In the case of MarketAxess, the CFTC found that certain MarketAxess determinations as to interest rate swaps were effectively moot because those swaps had been previously certified to be made available to trade as a result of an earlier MAT Determination submitted by TW SEF. Therefore, the requirement as to the exchange trading of those swaps will become effective as of February 26, 2014.The CFTC noted that all transactions involving swaps which are subject to the trade execution requirement must be executed through a DCM or SEF, including swaps that are part of so-called "package transactions," or groups of transactions that are executed together for price coordination or other reasons.

See: CFTC Certification and Untranched Credit Default Swap Indices Table.Related news: CFTC Issues Trade Execution Mandate for Additional Interest Rate and Credit Default Swaps (with Lofchie Comment) (January 28, 2014); CFTC Issues Trade Execution Mandate for Certain Interest Rate Swaps (with Robins Comment and Lofchie Comment) (January 17, 2014); CFTC Issues Trade Execution Mandate for Additional Interest Rate Swaps (January 23, 2014).Other related news: MFA Comment Letter to CFTC on SEF Trading Rules and Onboarding Documentation (with Lofchie Comment) (January 9, 2014) MFA Supports More Limited Made-Available-to-Trade Submissions (December 6, 2013); MFA Submits Suggestions to CFTC on MAT Submissions (with Lofchie Comment) (November 25, 2013); SIFMA and ISDA Criticize SEFs' Made-Available-to-Trade Submissions (with Lofchie Comment) (November 21, 2013); CFTC Extends Comment Period on Certification from Javelin SEF to Implement Available-to-Trade Determinations (with Lofchie Comment) (November 1, 2013); SEF Seeks Determination of Mandatory Exchange Trading of Swaps (with Lofchie Comment) (October 18, 2013).