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ICAP plc (IAP.L), a leading markets operator and provider of post trade risk mitigation and information services, announced yesterday that its UK subsidiary, ICAP Global Derivatives Limited (IGDL), has officially launched having received temporary Swap Execution Facility (SEF) approval from the US Commodity Futures Trading Commission (CFTC). IGDL is the first global SEF and Multilateral Trading Facility (MTF), regulated by both the CFTC and the UK Financial Conduct Authority (FCA).
Laurent Paulhac, CEO of the ICAP SEF, said: “The launch of IGDL is an important initiative for our clients and our markets, mitigating the risk of liquidity fragmentation. With this dually regulated entity, market participants from all key jurisdictions can participate in the same global liquidity pool for our G3 rates products. In conjunction with this launch, we are rolling out our next generation voice Request for Quote (RFQ) protocol, called vRFQ 2.0, delivering voice execution services to our clients that are specifically designed to be compliant with UK and US regulations. vRFQ 2.0 is powered by technology innovation enabling our voice execution services to work seamlessly with i-Swap, our interest rate swap (IRS) electronic execution platform.”
IGDL allows ICAP to bridge the CFTC’s SEF rules with financial services regulation of the United Kingdom and European Economic Area (EEA), as a UK incorporated entity authorised and regulated by the FCA as well as registered as a SEF with the CFTC. The CFTC registration is in addition to IGDL’s UK regulatory permissions, which include the ability to operate a MTF, allowing the Group to take advantage of the MiFID passport regime for EEA liquidity. IGDL is also authorised to provide direct access to customers in the EEA and Canada (Ontario).
Peter Best, COO of the ICAP SEF, added: “With mandatory swaps trading now a requirement for many market participants across multiple asset classes, ICAP is committed to offering its customers market-leading execution solutions that manage their swap risk in a fully compliant manner. IGDL is the result of ICAP’s commercial, legal, regulatory, technology, and operational teams together focusing on delivering an unparalleled trading experience and multi-jurisdiction-compliant platform in response to client needs and expectations. We have consulted heavily with our major clients in the process and look forward to continue to be a trusted partner for all market participants now and in the years ahead as the marketplace adapts to a regulated trading environment, and we want to thank our customers sincerely for their support and confidence during this initial phase of the process.”
By registering to be a SEF with the CFTC, IGDL can provide direct access to market participants in both the US and EEA in a manner which satisfies SEF transaction level requirements and EEA regulatory rules via its electronic order books and US and London based voice swap execution specialists. IGDL, available to all market participants, integrates i-Swap, ICAP’s award-winning electronic interest rate platform, with vRFQ 2.0, allowing for the broadest and most efficient facilitation of liquidity.
IGDL will initially focus on G3 Rates, including USD, EUR and GBP - IRS, OIS, FRAs, IROs, Swaptions, Inflation and Exotic Swaps and Options. All other products and instruments will continue to be serviced on ICAP's existing US SEF, ICAP SEF (US) LLC. ICAP intends to migrate more products to IGDL and will seek additional permissions with relevant regulators to operate the IGDL SEF in more jurisdictions, such as countries in the Asia-Pacific region.
