The Commodity Futures Trading Commission has imposed for the first time a requirement that certain swaps be traded on a regulated market. Beginning February 15, 2014, certain cleared interest rate swaps and index credit default swaps will have to be executed on a swap execution facility or designated contract market, or, in certain cases, on an EU multilateral trading facility.

Overview -

As a result of a series of actions by the Commodity Futures Trading Commission (CFTC), certain cleared interest rate swaps and index credit default swaps will have to be executed through an order book or a request for quote system on a registered swap execution facility (SEF) or designated contract market (DCM), or, in certain cases, on a qualifying EU-regulated multilateral trading facility (MTF). In connection with this requirement, the CFTC has provided temporary no-action relief from the mandatory trading requirement for so-called “package transactions” that include a swap that would otherwise be subject to mandatory trading, and has clarified certain reporting issues with respect to swaps traded on a SEF or DCM.