CFTC Adopts Long-Awaited Rule on Swap Execution Facilities (SEFs) and Other Swaps Trading Rules

The US Commodity Futures Trading Commission (CFTC), on May 16, 2013, took long-awaited action to approve four separate rules and guidance.  The rulemakings, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) concern:

• Core principles and other requirements for swap execution facilities (SEFs);
• The process for a designated contract market (DCM) or SEF to make a swap available to trade under Section 2(h)(8) of the Commodity Exchange Act (CEA); and
• Procedures to establish the appropriate minimum block size for large notional off-facility swaps and block trades.

That same day, the CFTC also issued interpretive guidance and a policy statement regarding the application of Section 747 of the Dodd-Frank Act, which amends the CEA to prohibit certain “disruptive trading practices.”

Latham & Watkins’ recent Client Alert, available here, which was originally published on June 4, 2013, offers a succinct summary of the three rulemakings as well as the Antidisruptive Practices Guidance.