I talked to an Economist reporter based in Paris on Wednesday (October 2) about what the first day of SEF trading means to the market. I think the key point to note on the quote below is that we’re talking about the day 1 impact. The longer term impact on the the market I believe will in fact be exceptional. Not just because of the transparency and all of the other things Dodd-Frank wanted, but because it will fundamentally change the client-street relationship in the swaps market.
Volumes traded on the platforms’ first day seem not to have been exceptional. “The government shutdown had a bigger effect on the swaps market than SEFs did,” says Kevin McPartland of Greenwich Associates, a consultancy.
Volumes in notional terms weren’t exceptional, but the fact that we had SEF trading at all after over 3 years of debate was pretty exciting. Was great to see not only IRS and CDS traded, but also permitted transactions such as NDFs and FRAs. We’re only just getting started.
Read the full article at Economist.com (or in print at your local newsstand, if anyone reads print anymore!).