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Swaps fragmentation begins to subside 

September 12, 2014
Mike Kentz, IFR Asia

The fragmentation of liquidity in certain over-the-counter swaps contracts across national borders may finally be subsiding, a year after Dodd-Frank regulations first pushed European market participants away from their US counterparts.

International clients are slowly beginning to warm to the idea of trading on swap execution facilities after having avoided the platforms for the past year, according to platform operators. 

“One of the more recent changes we’ve seen is that the fear of SEFs internationally is fading,” said George Harrington, global head of Bloomberg’s fixed income trading business on a panel at ISDA’s North American General Conference on Tuesday.

“Our international clients wanted to stay off-SEF initially because they were worried the reporting requirements would mean the whole market could see their positions…but over the past six-to-nine months they’ve realised the risk that your activity is easily discoverable is less than originally thought.”

Read more: IFR Asia

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