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January 29, 2019
TO: ICI MembersDerivatives Markets Advisory Committee SUBJECTS: Compliance
Derivatives
Disclosure
Investment Advisers RE: ICI Files Comment Letter With CFTC on Post-Trade Name Give-Up
In November, the Commodity Futures Trading Commission (CFTC or “Commission”) requested public comment on the practice of post-trade name give-up on swap execution facilities (SEFs) for swaps that are executed anonymously on the SEF and are intended to be cleared.[1] Today, ICI filed a comment letter with the CFTC urging the Commission to abolish this harmful practice. Our letter is attached and is summarized briefly below.
Under the practice of post-trade name give-up, the identity of each swap counterparty is disclosed to the other after a trade has been matched anonymously on a SEF. In its request for comment, the CFTC asks (i) whether post-trade name give-up is needed; (ii) the costs of this practice; and (iii) whether the CFTC should intervene regarding the use of this practice. ICI’s letter explains that post-trade name give-up is unnecessary and harms regulated funds and their shareholders. We urge the CFTC to issue a proposal abolishing this practice with respect to swaps that are intended to be cleared and are executed anonymously on SEFs.
The letter explains that, while the identities of the parties to a swap is an important term for uncleared swaps, disclosure of the parties is unnecessary for swaps that are executed anonymously on a SEF and intended to be cleared. The letter further explains that post-trade name give-up harms buy-side market participants, including regulated funds and their shareholders, by resulting in information leakage and less favorable trading terms.
Sarah A. Bessin
Associate General Counsel
George M. Gilbert
Assistant General Counsel
endnotes
[1] Post-Trade Name Give-Up on Swap Execution Facilities, 83 Fed. Reg. 61571 (Nov. 30, 2018), available at https://www.cftc.gov/sites/default/files/2018-11/2018-24643a.pdf.