In October 2013, Javelin SEF, LLC (Javelin) and trueEX, LLC (trueEX) self-certified their determinations that certain interest rate swaps are made available to trade (MAT) for purposes of the Commodity Exchange Act (CEA) and Commodity Futures Trading Commission regulations. The CFTC’s Division of Market Oversight has announced that Javelin’s and trueEX’s MAT determinations are deemed certified, meaning that all swaps covered by the determinations will be subject to the trade execution requirement in CEA Section 2(h)(8) as of February 15, 2014 (for swaps covered by Javelin’s MAT filing) or February 21, 2014 (for all other swaps covered by trueEX’s MAT filing).
Counterparties must execute swaps that are subject to the MAT determinations on or pursuant to the rules of a swap execution facility (SEF) or designated contract market. A swap subject to the MAT determinations cannot be executed over the counter unless one or both of the parties invokes a valid exemption from clearing for the swap, which also operates as an exemption from the trade execution requirement. MAT swaps executed on or pursuant to the rules of an SEF are “required transactions,” so they must be executed through either the SEF’s order book or request-for-quote system unless the swap qualifies as a block trade.
Javelin’s MAT determination covers fixed-to-floating interest rate swaps referencing US dollar London Interbank Offered Rate (USD LIBOR) or the Euro Interbank Offered Rate (EURIBOR). USD LIBOR swaps have spot and IMM start dates with a par fixed rate and tenors of 2, 3, 5, 7, 10, 12, 15, 20 and 30 years. EURIBOR swaps have spot start dates with a par fixed rate and tenors of 2, 3, 5, 7, 10, 15, 20 and 30 years.
trueEX’s MAT determination additionally covers fixed-to-floating interest rate swaps referencing USD LIBOR with IMM start dates, a “standard coupon” rate (meaning a fixed coupon rate consistent with the ISDA Market Agreed Coupon contract) and tenors of 1, 2, 3, 5, 7, 10, 15, 20 and 30 years.