Icap Launches UK-Based SEF

Regulated by both the US Commodity Futures Trading Commission (CFTC) and the UK Financial Conduct Authority (FCA), IGDL is the first SEF to go live that is operated from a non-US location.

The dual regulation of IGDL means that it can operate as both a SEF and a multilateral trading facility (MTF) in Europe, allowing it access to European liquidity via the passport regime implemented through the Markets in Financial Instruments Directive.

"With this dually regulated entity, market participants from all key jurisdictions can participate in the same global liquidity pool for our G3 rates products," says Laurent Paulhac, CEO of ICAP's SEF. "In conjunction with this launch, we are rolling out our next generation voice Request-for-Quote (RFQ) protocol, called vRFQ 2.0, delivering voice-execution services to our clients that are specifically designed to be compliant with UK and US regulations. vRFQ 2.0 is powered by technology innovation enabling our voice execution services to work seamlessly with i-Swap, our interest-rate swap electronic execution platform."

IGDL is operating under temporary registration, a provisional nod from the CFTC that allows SEFs to begin running while awaiting completion of the full approval process.

In related news, Yieldbroker, an Australian platform that handles instruments subject to the SEF mandate, was granted conditional time-limited relief from the CFTC yesterday, meaning that it does not have to register as a SEF with the regulator until August 15, 2014.

SEFs are a critical part of market reform in the US, envisaged as central electronic platforms through which standardized derivatives will transact, in an effort to increase transparency and reduce systemic risk in the over-the-counter market.