Dealers fear Sef rules will hurt OTC market liquidity

The Commodity Futures Trading Commission headquarters

Dealers are becoming increasingly nervous that swap execution facilities (Sefs) - the trading platforms which serve as gateways to derivatives clearing in the Dodd-Frank Act - will undermine their client relationships, thanks to a Commodity Futures Trading Commission (CFTC) proposal that all quote requests go to at least five counterparties. Because clearing-eligible trades will need to find their way to a central counterparty via either an exchange or a Sef, the CFTC proposal implies dealers