Futurisation dooms energy swap execution facilities

The US Dodd-Frank Act envisioned a new type of trading venue for over-the-counter derivatives, known as swap execution facilities (Sefs). But in the energy markets, at least, it appears Sefs are dead and traditional futures exchanges have emerged triumphant. Alexander Osipovich reports

With the passage of the US Dodd-Frank Act three years ago, a strange new acronym entered the lexicon of traders. The swap execution facility (Sef) was created by lawmakers as a way to foist greater transparency on markets for over-the-counter derivatives, after the opacity of the market for credit default swaps (CDSs) was identified as a contributing factor to the global financial meltdown of 2008. Along with the mandatory clearing and reporting of trades, it was hoped that Sefs would help