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How Much Power Did the CFTC Give to SEFs and DCMs?

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A version of this blog post originally appeared in FOW. As additional final rules are promulgated throughout the globe, an emerging trend for financial market regulators is to transfer, allocate and defer significant implementation discretion to financial market utilities and other relevant transaction infrastructures. For instance, on May 16, 2013, in a landmark ruling decided in a public forum, the U.S. Commodities Futures Trading Commission (CFTC) voted, by a margin of 3-2, to implement, among other rules, the final "made available to trade” (MAT) rule. The MAT rule fundamentally changes the swaps market by instituting the method and manner by which specific products required to be executed and cleared are identified. This changes the swaps market because the CFTC, in its final rule, has effectively transferred, allocated and deferred significant power to swap execution facilities (SEFs) and designated contract markets (DCMs), (collectively, “facilities”) to unilaterally bind the entire swaps market to mandatory participation.

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