Middleware vendors face turf war with Sefs

Middleware vendors looked set to be big winners in the overhaul of over-the-counter derivatives markets, but they face competition from swap execution facilities. By Michael Watt

Middleware providers exist to make life simpler, so the growing structural complexity of the over-the-counter derivatives market should be a boom time for them. Instead, it may end up making them redundant, as swap execution facilities (Sefs) – the new trading platforms on which much OTC volume will be executed – muscle in on what has traditionally been the middleware firms’ turf.

“We are obviously focused on building our execution infrastructure at the moment. But if a Sef offers a middleware