US swap trading overhaul may reinforce market split, users warn

New rules on trade execution likely to halt any unifying shift of liquidity to order books

New Sef rules may relax execution methods

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Expected changes to US interest rate swap trading rules will only further solidify the current two-tiered structure between dealers and clients, warn some market participants.

The US Commodity Futures Trading Commission is set to propose amendments to its swap execution facility (Sef) rules in April that are likely to relax existing restrictions on execution methods, which are currently limited to request-for-quote systems and central limit order books (Clobs).

The reforms are expected to draw