Dropping unused order book mandate for certain swap transactions will reduce costs and improve market efficiency
Washington, D.C. — MFA supported a Commodity Futures Trading Commission (CFTC) proposal to eliminate the order book requirement for non-standard swaps in a comment letter submitted Friday. The proposal would codify relief the CFTC granted in 2025, providing greater regulatory certainty for swap execution facilities and market participants.
Current rules require swap execution facilities (SEFs) to maintain order books for non-standard swaps that are not subject to mandatory CFTC trade-execution requirements. Order books display bids and offers from market participants, but traders rarely use them for non-standard swaps because they often trade infrequently or are customized for specific risk-management needs. Eliminating the mandate will reduce unnecessary technology, infrastructure, and compliance costs while allowing SEFs to continue offering order books when there is market demand.
“Regulation should reflect how markets actually trade,” said Jennifer Han, MFA Chief Legal Officer. “Traders rarely use order books for non-standard swaps because they are unique and often trade infrequently. Eliminating this requirement is common-sense policy that will reduce unnecessary costs and improve market efficiency.”
MFA also urged the CFTC to preserve existing execution requirements for standard swaps that are subject to mandatory trade-execution requirements. The existing framework promotes price competition and pre-trade transparency. MFA recommended that the CFTC consider any changes through a separate rulemaking that evaluates the potential effects on competition, liquidity, transaction costs, and price discovery.
Read the full letter here.
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About the global alternative asset management industry
The global alternative asset management industry — including hedge funds, private credit funds, and hybrid funds — serves thousands of public and private pension funds, charitable endowments, foundations, and other global institutional investors. The industry provides portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets throughout the economic cycle.
About MFA
Managed Funds Association (MFA), based in Washington, D.C., New York City, Brussels, and London, represents the global alternative asset management industry. MFA’s mission is to advance the ability of alternative asset managers to raise capital, invest it, and generate returns for their beneficiaries. MFA advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. MFA has more than 180 fund manager members, including traditional hedge funds, private credit funds, and hybrid funds, that employ a diverse set of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors diversify their investments, manage risk, and generate attractive returns throughout the economic cycle.
