CFTC Gives CME SEF Approval

Temporary registration is a mechanism by which the CFTC can allow potential SEFs to begin commercial operations without having to wait for the full assessment period, given that they fulfil basic criteria.

CME is the latest in a raft of SEF applicants to be issued with the notice, after what has been a troubled birth for the new derivatives facilities. Short deadlines and missed mileposts, coupled with a US government shut down recently, have meant that SEFs have been mired in confusion of late.

SEFs are intended to stand between buyers and sellers of standardized derivatives contracts, which were traded on an over-the-counter, bilateral basis in the past. They form an important aspect of the Dodd-Frank Act, and aim to both increase transparency and mitigate systemic risk in what was formerly an opaque market dominated by a handful of dealers.