Sefs threaten dealer-client relationship

Execution fears

Harry Harrison

Everyone in the industry knows the Dodd-Frank Act will lead to massive changes in how the derivatives markets work, but dealers are becoming increasingly nervous the rules may change the market far more than they had thought. One worrying implication – at least for banks – is that customer relationships may be undermined by the arrival of swap execution facilities (Sefs). Specifically, a proposal by the Commodity Futures Trading Commission (CFTC) will require a request for quote (RFQ) to be sent

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