CFTC approves first Dodd-Frank swap exchange

The Commodity Futures Trading Commission has approved trueEX, the first swaps exchange that complies with the 2010 Dodd-Frank Act.

Interest rates swaps are currently largely unregulated and traded over the phone. The trueEX exchange will initially serve the interest rate swaps market and expand into other derivatives over time.

“trueEX is a significant step in the evolution of the derivatives markets,” Sunil Hirani, trueEX’d CEO and founder, said, according to EON. “We are bringing transparency for the first time to this opaque, multi-trillion dollar market. Moving the derivatives markets to an exchange-traded and centrally cleared environment will mitigate systemic risk, reduce execution and processing costs and provide much-needed transparency.”

Participants will also be able to choose from a number of clearing houses, a feature not previously available on regulated exchanges. The trueEX exchange is currently being tested and will begin operations in the first quarter of 2013.

Hirani said that the exchange will re-instill confidence in the derivatives markets.

“The current lack of confidence in global markets—particularly in derivatives markets—has created the impetus for a regulated, transparent and rules-based trading platform,” Hirani said, EON reports. “This is precisely what trueEX will deliver, allowing both market-makers and buy-side firms to on-board as quickly as possible to meet their regulatory requirements. Additionally, we anticipate offering futures trading as soon as practicable.”

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