Icap Aims for London-based SEF

Icap has changed the name of Icap Electronic Broking to Icap Global Derivatives Limited (IGDL) as part of the move, and the firm already has approval for a US-based SEF. The proposed SEF will handle trading in euro-, dollar- and pound sterling-denominated interest-rate swaps. Recently, European political authorities announced agreement on a regulatory package that will introduce SEF-like entities in Europe ─ organized trading facilities (OTFs)—but these are still several years away from operation. By contrast, the CFTC has mandated certain swaps to only trade through SEFs, starting February 15.

Icap's move comes amid a recent lawsuit filed against the CFTC by the Securities Industry and Financial Markets Association (Sifma), along with other industry lobbying groups, regarding the extra-territorial reach of the CFTC's rules regarding swaps. The agency regards transactions with what they define as US persons being under the aegis of the Dodd–Frank Act, and thus, the CFTC's oversight, requiring many foreign firms to potentially register with the regulator as swap dealers.

Icap is arguably the most high-profile firm to submit an application for registration as a SEF operating from a non-US location, but it isn't the first to be affected by the new rules. Australia-based Yieldbroker has received multiple time-limited, no-action relief letters from the CFTC, where the regulator will not take enforcement measures against the platform for not registering as a SEF. The most recent of these extended the period to May 2014, while the CFTC and the Australian Securities and Investments Commission iron out extra-territorial issues with one another.

This story was amended from its original form, which said that the BrokerTec platform would become Icap's SEF. This is incorrect, and Icap Electronic Broking will become the London-based SEF, while BrokerTec will remain as is.