U.S. Swaps 2015 : Paradise Lost?

Within the U.S. market today, nearly 40% of all Interest Rate Derivatives (IRD) trading is executed via Swap Execution Facilities (SEF) but nearly 90% of this volume is split between six platforms and 50% between just two. These SEFs have become the key battleground for U.S. rule makers’ interpretation of the new transparent and systemically sound Over-the-Counter (OTC) trading workflow first envisions by the G20 mandates of 2009 and Title VII of the Dodd-Frank Consumer Protection Act.

The specter of regional fragmentation in interest rate swap trading flows as a result of early implementation within the U.S. has long been looming. While initial evidence supported the narrative that regulatory market structure changes have caused regional fragmentation in liquidity, recent data suggests that this trend may be abating- for now. In this TABB Group report, U.S. Swaps 2015 : Paradise Lost?, TABB Group looks at recent developments in the U.S. Interest Rate Swap market, market share and volume trends within the SEF trading landscape, and emerging liquidity dynamics between European and U.S. regulatory regimes.