Independent open-access electronic swaps trading platforms created under Title VII of the Dodd-Frank Act that allow customers to enter into swaps with one another directly. SEFs were devised by legislators in an effort to:

SEFs must register with, and are regulated by, the CFTC, and are subject to extensive regulatory rulemaking under Title VII. The first SEFs went live in October 2013 (see Legal Update, SEFs Go Live, CFTC Issues Limited No-Action Relief from Some SEF Rules).

Under Title VII and related rulemaking, over-the-counter (OTC) derivatives transactions that were historically entered into bilaterally, off-exchange, including many interest rate swaps, must now be executed on either a SEF or DCM (see Legal Update, MAT Summary: CFTC Swap Exchange-Trading Mandates and Effective Dates).

Note that security-based SEFs (SBSEFs) are similar platforms also created under Title VII for the electronic trading of security-based swaps (SBS). SBSEFs are subject to regulation by the SEC.

For more information on SEFs, see Practice Note, US Derivatives Regulation: Swap Clearing and Trade Execution: Swap Exchanges: DCMs and SEFs.