U.S. regulator may delay swaps trading platform compliance

WASHINGTON, Sept 12 Thu Sep 12, 2013 7:13pm EDT

WASHINGTON, Sept 12 (Reuters) - The U.S. swaps regulator may give new exchange-like platforms more time to comply with its rules, senior officials signaled, to let the industry sort out a spate of logistical issues before trading starts.

Some 20 companies are setting up a so-called Swaps Execution Facility (SEF), an untested type of trading platform designed to make the $630 trillion swaps market less opaque, and end the practice of privately negotiating deals.

They must comply with the new rules by Oct. 2, but the regulator, the Commodity Futures Trading Commission, has so far only approved two companies as a SEF.

Two commissioners signaled they wanted to give the industry more time to prepare, at a meeting with market participants of the so-called Technology Advisory Committee (TAC).

Commissioner Mark Wetjen, a Democrat, said the CFTC should consider to "change course on these compliance dates", and Commissioner Scott O'Malia, a Republican, agreed.

"Based on what we expect of the industry and the short time-frame... we have to delay the Oct. 2 date," O'Malia told journalists after the meeting.

Regulators across the world have cracked down on derivatives markets, which helped cause the 2007-09 financial crisis, forcing trades onto public platforms, and forcing market parties to publish more data about their trading.

Bloomberg LP and Tradeweb - with two different platforms - are the only two companies with approved SEF status. Tradeweb is majority-owned by Thomson Reuters Corp.

It was not clear whether the CFTC would grant the delay, which needs the approval of Chairman Gary Gensler. Gensler was no longer present at the meeting when the issue came up, though staff said he was aware of the issue.

"I can tell you that this has already been discussed with the chairman," said David Van Wagner, who heads the CFTC's Division of Market Oversight. "The chairman is well aware of the concerns," he said.

A spokesman for Gensler declined to comment. The CFTC could for instance grant the delay through a so-called no-action letter issued by staff.

Clients of the SEF trading platforms had expressed worries at the meeting that they could not make a proper choice between the different providers because there was so little time left and they did not know who would be approved.

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