Dealers weigh Sef strategies

The Dodd-Frank Act created a multitude of would-be swap execution facilities (Sefs) – trading platforms that will aggregate dealer liquidity. Now, dealers want to hoover up the Sefs by building their own aggregation services, but it’s a strategy that could force the over-the-counter derivatives business into strange new territory. By Duncan Wood

The golden age of the swap execution facility (Sef) is over. It lasted less than a year and ended before any Sefs had actually opened for business – or so dealers would have you believe.

When the Dodd-Frank Act was signed into law on July 21 last year, it made it obligatory to execute clearing-eligible over-the-counter derivatives trades on an exchange or Sef – defined as a system or platform that brings together multiple participants on both sides of the market. In fewer than 100 words, the