Commissioner O’Malia on "Reluctantly" Concurring with the Adoption of the SEF Rules (with link to Pirrong Blog Item)

CFTC Commissioner Scott D. O’Malia delivered a statement on Swap Execution Facilities (SEFs), explaining why he was "reluctantly" concurring with the decision of the Commission to approve the final rule. In his statement, O'Malia discussed how a SEF will allow market participants to access a more transparent market and offer innovative trading opportunities. Unlike the futures exchanges which are tied to a single clearinghouse, trades executed on SEFs can be cleared at different clearinghouses, which will provide a new competitive execution space, according to O'Malia. He also discussed what he felt were some of the problems with the SEF Rule:

• The Rule’s requirement to send a request for quote to three market participants is not supported by law;
• The Rule should have provided further clarity regarding voice execution; and
• The Rule should have provided clarity regarding exchange of swaps for related position transactions.

View Speech in full here (links externally to CFTC website).See also article from Craig Pirrong blog criticizing the three quote rule.