CFTC Approves trueEX as First Regulated Exchange Serving the $300 Trillion Global Interest Rate Swaps Market
The U.S. Commodity Futures Trading Commission (CFTC) has approved trueEX, the first Dodd-Frank compliant swaps exchange, as a Designated Contract Market (DCM). trueEX will initially serve the $300 trillion global interest rate swaps (IRS) market and expand into other liquid derivatives as appropriate.
Interest rate swaps are currently traded largely over the phone, without regulatory oversight, pre-trade or post-trade transparency, and with very little automation.
The trueEX electronic exchange has been designed to serve the needs of both market makers as well as asset managers, hedge funds and other buy-side firms. trueEX is currently testing with market participants and will expand its on-boarding efforts in the fourth quarter. trueEX will commence operations in the first quarter of 2013.
“trueEX is a significant step in the evolution of the derivatives markets,” said founder and Chief Executive Officer Sunil Hirani. “We are bringing transparency for the first time to this opaque, multi-trillion dollar market. Moving the derivatives markets to an exchange-traded and centrally cleared environment will mitigate systemic risk, reduce execution and processing costs, and provide much-needed transparency.”
trueEX also offers participants a choice of multiple clearing houses, which has not previously been available on any regulated exchange. The scalable business model will be able to handle most commoditized transactions in the marketplace.
trueEX is being launched by veteran financial technology entrepreneurs whose proven track record of derivatives industry innovations includes building the first electronic trading platform, first electronic processing platform and first clearing house for credit derivatives. trueEX is funded by private investors who have invested in many of the most successful exchange and financial technology companies.
“The current lack of confidence in global markets – particularly in derivatives markets – has created the impetus for a regulated, transparent and rules-based trading platform,” Mr. Hirani said. “This is precisely what trueEX will deliver, allowing both market-makers and buy-side firms to on-board as quickly as possible to meet their regulatory requirements. Additionally, we anticipate offering futures trading as soon as practicable.”
trueEX Independent Director Patrick M. Parkinson, former director of the Division of Banking Supervision and Regulation for the Federal Reserve Board, who played a leading role in financial regulatory reform, including proposals for regulation of the OTC derivatives markets, said, “trueEX is the first exchange to provide the kind of transparent trade execution of standardized transactions that has been deemed a necessary element of post-crisis regulatory reform. trueEX will be fully compliant with the new regulatory requirements.”
Ken Raisler of Sullivan & Cromwell, former general counsel of the CFTC and Regulatory Counsel for trueEX, said, “trueEX provides the certainty of Dodd-Frank compliance for swaps transactions. Its approval offers market participants a robust, regulated and transparent interest rate swaps exchange.”
New York-based trueEX LLC, the first swaps exchange approved by the Commodity Futures Trading Commission (CFTC) as a Designated Contract Market (DCM), was designed from the ground up as the first Dodd-Frank compliant swaps exchange. Founded by CEO Sunil Hirani and co-founder Jim Miller in 2011, trueEX will initially trade interest rate swaps and add other liquid derivatives as appropriate.
Mr. Hirani also founded Creditex, the first electronic trading platform for credit default swaps (CDS), which was sold to ICE in 2008. He and members of the trueEX management team also launched T-Zero (now ICE Link).
For additional information, please visit the trueEX website: www.trueex.com