CFTC Removes SEF Requirement from Optimisation Providers

The US Commodity Futures Trading Commission has acceded to a request from three optimisation services providers, Capitolis, Quantile and TriOptima, and issued a “no-action” letter for the firms’ post-trade services.

The CFTC’s Division of Market Oversight, and Market Participants Division have both taken no-action positions, which means the firms’ offering of post-trade risk reduction services (PTTRS) for swaps does not require them to register as a Swap Execution Facility (SEF). IN the release, the CFTC also notes notes the three businesses have registered with the Commission as introducing brokers subject to compliance with CFTC regulations and National Futures Association rules. 

Noting that the letter provides regulatory clarity Capitolis says it reinforces PTRRS’s growing recognition as a critical tool to reduce risk and strengthen global derivatives markets. The move also aligns the US regulatory framework with those in the UK and the EU, enabling greater optimisation capabilities.

“This is a milestone for post-trade risk reduction in the US market,” says Gavin Jackson, co-head of portfolio optimisation at Capitolis. “PTRRS is a categorically different activity from traditional derivatives trading, reducing sources of non-market risk rather than creating them. The CFTC’s no-action letter helps to enable a broader set of market participants to access optimisation runs. Combined with aligned frameworks in the UK and the EU, this opens the door to more efficient global optimisation at a time when capital, funding and liquidity requirements have never been more important.”