The world's largest futures market, the CME Group Inc, had applied to create a new kind of platform known as a swap execution facility and this would focus on trading commodities derivatives. The exchange operator said it is seeking permission from the US Commodity Futures Trading Commission to form the market.
Other companies have received approval to create an exchange, such as IntercontinentalExchange Inc, ICAP Plc, Tradeweb Markets LLC, Bloomberg LP and GFI Corp, as announced in the CFTC website.
Under the Dodd-Frank Act of 2010, there are specific provisions designed to move the swaps market from unregulated transactions negotiated outside of the exchange to more transparent trading. This was borne out of the experience from the 2008 global economic crisis. Now with swap execution facilities or SEFs, the CFTC and Securities and Exchange Commission would have oversight them.
CME is seeking to move into the market after the CFTC completes the rules for SEFs in May, which makes competition for the trades in the USD633 trillion over the counter derivatives industry.
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