MFA submitted a supplemental letter urging the Commodity Futures Trading Commission (CFTC) to permit more efficient electronic trading of invoice spread package transactions in the U.S.
MFA explains that:
- Invoice spreads combine an interest rate swap and a Treasury future and trade in volumes of tens of billions of dollars each day.
- The CFTC permits these packages to trade both on and off swap execution facilities (SEFs).
- CME Rule 538 prevents SEFs from participating in their execution, forcing firms to rely on less efficient phone- and chat-based trading.
- Targeted no-action relief would expand execution choice, support innovation and competition, and reduce the risk that trading moves offshore.
- The relief would preserve existing clearing, reporting, recordkeeping, surveillance, and market-conduct requirements.
- MFA proposes safeguards limiting the relief to bona fide invoice spread packages and preserving regulators’ access to trading records.
