Frequently Asked Questions


What is TraditionSEF’s status with the CFTC?

Effective as of January 22, 2016, the Commodity Futures Trading Commission granted TraditionSEF registration as a swap execution facility.

Is TraditionSEF a separate legal entity from the existing Tradition entities?

Yes, TraditionSEF, LLC is a separate legal entity and operates as a wholly owned subsidiary of Compagnie Financiere Tradition, S.A. within the Tradition Group of Companies. 

How is TraditionSEF Identified?

TraditionSEF is identified via our unique LEI, which is : 549300MBO45EHETL4438 and our MIC Code : “TSEF”

What asset classes, products and currencies are supported by TraditionSEF?

Tradition operates a multi-asset SEF covering all major asset classes and associated currencies (Rates, Credit, FXO, FX NDF, Equity Derivatives and Commodity swaps). We support trade processing and execution in almost all OTC Swap types as defined by the CFTC, including “Required” and “Permitted” Products (See ‘Product Listed for Trading’ section below). 

What are the operating and service hours of TraditionSEF?

TraditionSEF operates on days which are business days in Hong Kong, Singapore, Tokyo, London and New York.  For purposes of determining if a day is a New York business day, the NYSE must be open and such day may not be a SIFMA- recommended full day holiday.  Days subject to early close in any jurisdiction will constitute a business days regardless.

Days are calculated by reference to Eastern Prevailing Time in the United States.  On any day on which TraditionSEF is operating, our logical “close” and subsequent end of day maintenance and report generation will be conducted between the hours of 5:30PM and 6:30PM Eastern Time. Trades executed after 5:30pm will be reported in the following day trade reports.

TraditionSEF reserves the right to close on different days or times if requested or required to do so by the CFTC, or where there is a force majeure event, such as hurricanes, flooding, terrorist attack or otherwise affecting the above-mentioned location generally, any relevant market infrastructure or TraditionSEF’s facilities in particular.  

Does TraditionSEF have a published Fee Schedule?

TraditionSEF’s Fee Schedule is available upon request by contacting our onboarding and Administration Department at : 

How Does TraditionSEF keep its client community informed as to changes in opening hours, Fees and other operational matters?

Upon an affected change, TraditionSEF will distribute a “Notice To Participants” to all registered Authorized Representatives of Participants, Broker Firm Participants and Clearing Firms.  Notices are also posted to the TraditionSEF website here.

Do position limits apply to IR swaps ? 

There are currently no position limits imposed by the CFTC and we do not currently have them.  For our position limits and exemptions, please view TraditionSEF Rule 532. 


Rulebook1 (Participants, Customers, Broker Firms, ISVs)

Where can I find the TraditionSEF Rulebook?

The TraditionSEF Rulebook can be found on our website here.

How often is the TraditionSEF Rulebook updated?

Our Rulebook is subject to change at any given time. Changes are affected by (a) CFTC Rule or Policy changes (b) Requests made to TraditionSEF by CFTC staff to modify our Rulebook pursuant to compliance with SEF Core Principles and (c) modifications by TraditionSEF to operating models, trading protocols, legal matters etc. 

How do I get notification of changes to the Rulebook?

Upon an affected change, TraditionSEF will distribute a “Notice To Participants” to all registered Authorized Representatives of Participants, Broker Firm Participants and Clearing Firms.  Notices are also posted to TraditionSEF website here.

Do you have information relating to TraditionSEF that is NOT contained in the publicly available version of the Rulebook and/or Platform Supplements?

Yes, as part of the Part 40 submission process, TraditionSEF is entitled to request confidential treatment of certain aspects of our Rulebook. This typically relates to information contained in our Platform Supplements which are specific to the operating characteristics of each of our Trading Platforms (e.g. StreamGlobal and Trad-X). Full versions of the Platform Supplements are available upon request to all registered participants of TraditionSEF. Please contact our Onboarding and Administration team at : for further information.

Am I subject to the rule book if I access as a Customer of a Broker Firm Participant under Agency or Sponsored Access models?

Yes, anyone who has access to (whether direct or indirect), or provides access to TraditionSEF for the purpose of trade execution is subject to the rulebook as it applies to them.

The Rulebook/s make references to audits/reviews/examinations of Participants’ compliance with the rules; could you please comment on what this entails and what are the expectations as far as the Participant is concerned? Who conducts these – both the NFA and/or the SEF? 

The CFTC requires us by regulation to create and maintain a set of procedures and rules to monitor and control the activity of participants on our SEF.  The CFTCs requires that we monitor and ensure compliance with these rules through audits/ reviews/ and examinations.  This oversight of participant conduct is currently managed both by the in-house surveillance team and through the SEF’s vendor relationship with the NFA.  The CFTC further requires that we have a disciplinary program in place adequate to ensure compliance with its regulations.  These requirements are no different or less demanding than you face with other exchange memberships.

What are participants’ obligations are with respect to record keeping and audit trail requirements? 

CFTC regulations require that an audit trail for each execution be maintained and readily accessible should a request for its delivery be received.  TraditionSEF’s rules were specifically crafted to accommodate this regulatory requirement.  Rule 510 in our Rulebook provides more detail. 

When do we receive the Participant Notice?

Participant Notices are issued as a result of several circumstances e.g. TraditionSEF Rulebook amendments, notifications of SEF holidays, changes to platforms, changes to product, regulatory changes, etc.  As an example, upon an affected change to a platform’s operating characteristics, TraditionSEF distributes via email a “Notice to Participants” to all registered Authorized Representatives of Participants.

You may view copies of notices under the notice section of the TraditionSEF regulatory page.

[1] This information is for illustrative purposes only.  Market participants should rely on the current version of the TraditionSEF Rulebook when determining rules applicable to such entities.

Participation and Onboarding

How do I get details on how to become a member of TraditionSEF in the capacity I wish to participate (e.g. Trading, Clearing, Broker, Customer of Broker, ISV etc)?

For instructions and full set of onboarding documents associated with each participant type, please visit our website here.  For any additional inquiries please e-mail:

Where do I find the necessary information and forms?

All necessary onboarding documents can be found on the onboarding page of the TraditionSEF website.

How does the onboarding process work?

Onboarding works in a two-phase process: 

Phase 1 : Legal and Compliance onboarding
Upon receipt of your completed onboarding application forms with associated documentation, TraditionSEF onboarding staff will begin a review process for completeness and accuracy of the information submitted. Assuming all information required has been provided, this review period take approximately 48hrs. Upon successful completion of this review process you will be formally notified that you have been approved as a participant.

Phase 2 : Technical onboarding
Upon completion of Phase 1, our Onboarding and Trading Operations teams will work with you to establish all technical requirements for onboarding. In parallel, you will be established in our internal systems as an approved participant and set up in Finance, Compliance, Legal and Operations accordingly.

What Information is required as part of this process?

From a legal and compliance perspective, all required information is listed within the onboarding pack associated with your specific mode of participation. Technical requirements will vary dependent on the products and markets you wish to access and the method by which you choose to access and execute against our liquidity pools. For further information on Technical requirements, please contact our onboarding team at :

Must I identify key personnel for communication purposes?

Yes, TraditionSEF requires that each participant identify Authorized Representatives for the purpose of controlled and authorized information flow between the SEF and its clients. All “formal” modifications to a participants profile (-eg- Trader lists, products accessed etc) must be submitted and approved by an Authorized Representative. Similarly, any formal notification issued by TraditionSEF as it relates to our daily operations or regulatory status will be sent only to Authorized Representatives of the participant.

How do I on-board/off-board authorized traders?

Participants may on-board authorized traders to the SEF through their Authorized Representative.  Please submit onboarding request to and include the following information: 

  • Participant LEI
  • Asset Class
  • Trader Name
  • Phone Number
  • Email Address
  • Product
  • Currencies (Name specific approved currencies)
  • Platform access type (if any)

To off-board traders, Authorized Representative must e-mail a request to

If I wish to access TraditionSEF indirectly (i.e. Agency/Sponsored Access), do you provide a list of authorized Broker Firm Particpants that provide Order placement and execution on TraditionSEF?

Yes, a full list of our authorized Broker Firm Participants can be found on our website here.

How do I establish myself as a participant on TraditionSEF via one of the authorized Broker Firm Participants?

If you do not already have a direct relationship with one of our listed BCP’s, TraditionSEF onboarding staff will be happy to facilitate an introduction to the appropriate personnel at any of these firms. 

Am I required to complete any onboarding documentation under your Agency or Sponsored Access model?

  • For “Indirect” access where you will access our liquidity via a third party platform all onboarding documentation is provided by the third party Broker Firm Participant. 
  • For “direct” sponsored access where you wish to have direct access to our liquidity via one of our Trading Platforms, in addition to onboarding documents provided by the third party “sponsoring” Broker Firm Participant, you will also be required to sign a Platform User Agreement prior to gaining access.

If I am not a self-clearing member and I wish to trade cleared products do you provide FCM based access?

Yes, a full list of our approved FCMs can be found here.

Do you have people available to help if I need assistance with the onboarding process?

Yes, our onboarding staff can be reached at : or please call: 212 238 5908

Access Models

What types of access methods does TraditionSEF support?

Clients wishing to access our market liquidity may do so through two distinct models: 

  • Direct Access
    Participants or Customers operating under this model have direct access to market liquidity either via a Trading Platform (e.g. Trad-X for Rates) or via our in-SEF Brokers.

    Access to liquidity via Trading Platforms can be achieved either by use of our proprietary Graphical User Interface (GUI) or via API. API Specs will be provided as part of the technical on-boarding process and/or can be supplied by contacting our onboarding team at

  • Intermediated Access
    Participants or Customers operating under this model will be required to have a relationship with a Broker Firm Participant who will act as “Agent” for access to our market liquidity.

    Access to liquidity using this model can be via third party platforms such as (UBS NEO, Morgan Stanley Passport, Credit Suisse PrimeTrade etc) or alternatively via Authorized Brokers (voice intermediation) acting in an “on behalf of” capacity for a Broker Firm Participant bringing liquidity to the SEF for its Customers.

Are there different sets of paperwork required for each?

Yes, please refer to Section 3 of this FAQ “Onboarding” for details.

If I access Trad-X via a Broker Firm Participant’s platform.  What am I classified as and what do I have to sign? Am I subject to the Rulebook?

As a trading participant accessing TraditionSEF via a Broker Firm Participant, documentation, Rulebook and classification requirements will be subject to your ultimate legal engagement level (e.g. Participant or Customer). Further information related to this can be found in Sections 2 (Rulebook) and 3 (Participation and Onboarding) of this FAQ.

Will there be participant Categories (e.g. market-maker, market-taker) for access or Fee purposes?

No, at this stage we do not differentiate between participant types. All SEF participants are treated equally subject to our non-discriminatory access requirement and are subject to the same fee structure.

Are end user clients able to access your SEF?

Yes, under CFTC requirements, SEFs must provide impartial access to any Eligible Contract Participants (ECPs) who meet the participation criteria (clearing access etc) who wishes to gain access to market liquidity.

Are participants required to have a clearing arrangement with Futures Commission Merchant (FCM)?

Yes, for cleared products executed via TraditionSEF, ALL participants must either be a self-clearing entity or have an established clearing arrangement in place for the cleared products intended to be traded and to the Clearing Houses into which they will be cleared.  In addition, TraditionSEF will only support cleared trading activity via FCMs which have been onboarded to TraditionSEF as Clearing Firms. 

Trading Platforms

What Trading Platforms does TraditionSEF offer for access to market liquidity?

TraditionSEF is primarily an operator of Central Limit Order Book (CLOB) liquidity which it provides under a “hybrid” model. Hybrid being the combination of electronically provided orders (In several of our markets, TraditionSEF has electronically streamed two-way prices from market making firms throughout the trading day) and orders submitted to the SEF by “voice” traders via our in-SEF Brokers. In addition, TraditionSEF operates a voice based RFQ model.

TraditionSEF facilitates and executes market liquidity through some of the most recognized and market leading CLOB Trading Platforms available in the markets today:

Trad-X (Interest Rate Products)

Trad-X is Tradition’s award winning trading platform for OTC Interest Rate derivatives. Forming the backbone of TraditionSEF’s offering in Interest Rate products, the platform has market leading rich functionality, low latency and a proven ability to attract deep high-quality liquidity in a wide range of Interest Rate products for both MAT and Non-MAT transactions.

Widely recognized as the most advanced Central Limit Order Book available in the Interest Rate markets (regularly ranked as the No1 CLOB in Vanilla USD Interest Rates), Trad-X delivers capability designed to meet the demands of today’s evolving market structure and shifting regulatory landscape.  Trad-X offers a flexible execution methodology, combining voice and electronic pools of liquidity to ensure access to the richest and most dynamic liquidity available to market participants and the highest-quality trading experience.

Trad-X allows both hybrid and fully-electronic order entry, allowing users to execute the most complex of trading strategies via voice instruction via our in-SEF, SEF Execution Specialists (a.k.a Brokers), direct click-and-trade central limit order book access, and auction services.  Trad-X covers a broad range of Interest Rate products across USD, EUR, GBP and JPY currencies, including interest rate swaps, FRA’s, overnight index swaps, and single and cross-currency basis swaps.  

Developed in conjunction with key market participants, Trad-X provides firm, irrefutable and transparent streamed two-way pricing from multiple of the world’s largest global banks.  

For further details on this platform and its capabilities over and above that of the “IN-SEF” activity, please visit :

StreamGlobal (Credit Derivatives) 

StreamGlobal is a real-time trading interface developed over a number of years that allows users to trade in multiple global markets through a single interface. The interface consolidates and synchronizes market data from various trading platforms into a single view, providing visibility of the current markets in real time.

In certain Credit Markets, TraditionSEF utilizes this user friendly platform for the operation of CDX Index Auctions. Using Real-time technology and highly interactive screens available through direct access by traders and/or hybrid interaction via our SEF Execution Specialist trading interest can be entered for execution. 

In addition to serving the needs of TraditionsSEF's extensive global participant base, StreamGlobal also offers services in multiple other products international Jurisdictions serving clients who wish to execute transactions on or off SEF. For further details on this platform and it’s capabilities over and above that of the “IN-SEF” activity, please contact: Tel +1-212-238 5908 

Where are TraditionSEF’s Platform servers?

Rates (IRS & USD Inflation) Equinix NY4, U.S.
Rates (Latam) Equinix NY2, US
FXO Equinix LD5, UK
FX NDF Equinix NY2, US 
Equities Equinix LD8, UK
Commodities Equinix LD8, UK
Credit Equinix NY2, US


Does TraditionSEF have Business Continuity and Disaster Recovery Plans in place ?.


Do Authorized Traders receive unique User IDs when approved to use a platform?


Is the content of a Platform Supplement likely to change from time to time and how are we informed of changes?

Upon an affected change, TraditionSEF distributes a “Notice to Participants” to all registered Authorized Representatives of Participants.  Notices are also posted to the TraditionSEF website, as noted above.  

Trading Protocols

Which trading protocols do you support?

TraditionSEF supports a variety of trading protocols including: Electronic and Voice RFQ, Central Limit Order Book (CLOB) and Auctions.

For Voice based markets, can I have access to your voice brokers?

Yes, on the proviso that you have successfully completed the necessary onboarding process and are a TraditionSEF Participant or a Broker Firm Participant or Customer of an approved Broker Firm Participant. 

Is voice trading supported on TraditionSEF Trading Platforms?  If so, how?

Yes, for Required Transactions conducted via our Interest Rate Trading Platform (Trad-X) or our Credit Default Swap Index Trading Platform (StreamGlobal), we have placed our highly specialized Brokers inside the SEF. These specialists are available to assist clients in the management and execution of voice based Orders.

Are the Order Books operated by TraditionSEF anonymous?

MAT products are executed on a pre-trade to post trade anonymous basis. Non-MAT products are executed on a pre-trade anonymous basis with post-trade counterparty name disclosure.  

Does TraditionSEF offer API based Order submission and trading? 

Yes. As one of the most advanced operators of OTC swap liquidity pools, TraditionSEF provides API based access to our markets. Depending on asset class and product capabilities may vary. 

  • For our rates API specs please contact

Does TraditionSEF provide trading safeguards in the form of “fat finger checks” etc ?

Yes, on a platform by platform basis, TraditionSEF offers various trading safeguard controls.  As an example, on Trad-X (our Interest Rate Platform), we support Error Collars, OCOs, and Fat Finger size controls. In addition, we have in-SEF surveillance, market operations and trading operations staff employed to ensure the on-going safety and integrity of our market over the course of a trading day.  

Products Listed for Trading

Which Products does TraditionSEF have listed for trading?

For a complete set of our product listings, please visit our TraditionSEF website here.

Has TraditionSEF filed a Made-Available-to-Trade Proposal?


Risk Based Limit (Credit) Management for Cleared Products

Does TraditionSEF support Pre-Trade Credit Checks to ensure trade certainty when trading Cleared Products?

Yes, pursuant to rules published by the CFTC for pre-trade credit checks required to be conducted on cleared products, TraditionSEF has implemented a comprehensive model across the cleared products we provide for execution to ensure that all checks are conducted in compliance with this requirement.

What Risk Limit management methodologies does TraditionSEF support ?

Dependent on asset class and product, TraditionSEF offers a range of different Limit application and management methodologies. We support Notional (Gross/Net), Dv01 (Gross/Net) and initial margin on a trade-by-trade basis. Limits can be set in isolation or in any combination of those provided (i.e. More than one limit type can be applied on a client by client basis), the system will default to the most restrictive of those applied.

How are Limits for cleared swaps applied and managed by FCMs?

Client Risk Based Limits can be set in one of two ways :

  1. FCMs can manage limits via Traiana. TraditionSEF supports full Traiana integration for provision, cancellation and intra-day management of Risk Limits
  2. FCM’s have access to a secure website (TraditionSEF Credit Matrix MMC) for manual management of Risk Based Limits. This is also available as a failover option should Traiana experience operational difficulties

Is TraditionSEF connected and operational with Traiana?

Yes, as mentioned above, we are fully integrated and certified to Traiana.

Does TraditionSEF operate on a PING or PUSH based model for Risk Limit submission

In cleared Interest Rate products, TraditionSEF operates on a PUSH based model. Client Risk Limits are submitted to TraditionSEF and are stored and referenced locally within our Credit Matrix. This model has been adopted due to the speed at which our CLOB operates and processes liquidity across the IRS product list and curve.  A full functional spec is available under confidentiality to any onboarded Participant, Customer, Clearing Firm or Broker Firm Participant. In cleared CDX Index products, TraditionSEF operates on a ping based model utilizing 3rd party credit checking facility Traiana. 

Please describe the process if sufficient credit is not available to fully execute an Order. 

In the event that an insufficient Risk Based Limit is available to clear an entire submitted Order, the Order will be executed to the extent of the limit and the remainder will be cancelled.

Does TraditionSEF perform a pre-trade credit check on each leg of a packaged transaction? 

To the extent that each leg of the package is subject to clearing, yes, each leg of a package transaction is checked individually. 

For package transactions, can there ever be a case where any of the legs within the package is not pre-approved before being sent to the clearing house? 


Clearing, & Trade Settlement

To which CCPs does TraditionSEF have connectivity? 

TraditionSEF currently supports Clearing services owned and operated by CME, ICE and LCH.

Who will my Counterparty be to trades executed on TraditionSEF? 

The counterparty for cleared swaps will be the respective clearing house for the swap. The Counterparty for uncleared swaps will be an approved SEF Participant or a Customer as defined in the TraditionSEF Rulebook.

Are all trades processed anonymously?

MAT products are executed on a pre-trade to post trade anonymous basis. Non-MAT products are executed on a pre-trade anonymous basis with post-trade counterparty name disclosure.  

Will the SEF provide status updates to all parties on the deals submitted for Clearing?   

Unless notified otherwise, Cleared trades executed via TraditionSEF can be assumed to have been processed and submitted to clearing successfully. 

Please describe the process flow for deals rejected for Clearing by the CCP.  

In the event that a Trade fails to clear, TraditionSEF will either (a) Resubmit the Trade in accordance with CFTC Guidance if the failure was due to a clerical or operational error or (b) Render the trade void ab initio and inform the counterparties to the failed Transaction. Please see Rules 538 and 703 of the TraditionSEF Rulebook for specific detail on the process. The TraditionSEF Rulebook can be found at here.

How will CCP preference/memberships impact the RFQ, Order submission or order matching? 

CCP Preference whether for Orders going into the electronic CLOB or for the initiation of a voice RFQ must be identified at the point of Order entry or at the start of the RFQ process. For RFQs, the Clearing House preference will be communicated via SEF Brokers and/or Execution Specialists. For Orders submitted to the Central Limit Order Book, separate product codes are available for CME and LCH instruments.

Post-Trade Processing and Workflows

Does TraditionSEF use a Third Party Affirmation Platform to match and transmit Trade details to Clearing Houses (DCO’s) and Swap Data Repositories (SDR’s)?

TraditionSEF post-trade process flow will vary dependent on asset class. For clearing process flow the following currently applies: 

Rates  MarkitWire (CME & LCH)
Credit  ICE Link (ICE Trust)
Equities N/A – Non Cleared Products
FX Options N/A – Non Cleared Products
FX NDFs N/A – Currently voluntarily cleared by Counterparties via post-trade novation
Commodities  Direct (CME & ICE Vault)


For Reporting process flow, please refer to Section 11 of this FAQ (“Reporting Requirements”)  

Does TraditionSEF generate the USIs for all trades executed via its Platform(s)? 


Will I always receive a Trade Confirmation from Tradition SEF?

  • For clients operating as direct Participants and executing directly on TraditionSEF Central Limit Order Books or via voice RFQ then a Trade Confirmation containing all Economic Terms to the Transaction will be sent directly from TraditionSEF to the counterparties to the Trade.
  • For clients, as indirect participants and therefore executing via a Broker Firm Participants infrastructure and operations, dependent on the product being traded, the client may receive a Confirmation direct from TraditionSEF or indirectly via the Broker Firm Participant.
  • It should be noted that TraditionSEF is currently operating under the CFTC No-Action Relief Letter 15-25 which provides that the Division (CFTC) would not recommend enforcement action against a SEF that, without first obtaining copies of the underlying previously-negotiated agreements between the counterparties to a non-cleared transaction, incorporates such agreements by reference in the trade confirmation required under Commission Regulation 37.6(b). The letter also provided that the Division would not recommend enforcement action if a SEF failed to maintain a copy of the incorporated underlying agreements as required under Commission Regulations 37.1000, 37.1001, and 45.2(a)   

Will TraditionSEF report all legs of a Package Trade that are governed by the CFTC Rules?


For reporting and trade processing purposes, what counterparty static data will be maintained by TraditionSEF?  

All required static data is captured during the SEF onboarding process and is maintained by the SEF. 

Does TraditionSEF offer post-execution events, such as allocations, compression etc?

No, TraditionSEF does not provide pre/post-trade Allocation or compression services at this time.

Reporting Requirements

Does TraditionSEF Report Transactions executed via its Platforms and Services?

Yes, ALL trades (unless counterparties are subject to exemptive relief) are reported by Tradition SEF.

To which SDR’s does TraditionSEF Report?

Tradition SEF is connected to and reports to all major SDR’s (e.g. DTCC GTR, CME, ICE TradeVault).

How does TraditionSEF identify the Reporting Party for Trades executed on its Platform(s)

Prior to submission of Part 43 and Part 45 data for a Transaction, Tradition SEF determines and identifies the Reporting Party on a transaction using the ISDA “Reporting Party Rules” and Tiebreaker Logic.

Are there any SDR’s to which TraditionSEF does not currently report?

We do not report to BBG SDR.

How does TraditionSEF select the SDR for reporting purposes?

Choice of SDR is essentially market driven. On a product-by-product basis, Tradition SEF has a policy of defaulting to market sentiment and preference.

Does TraditionSEF connect directly to SDR’s or via middleware providers?

Both. For the purposes of service integrity, it is our intention to build out both direct and third party driven reporting capabilities for all asset classes. Currently on a product by product basis the following applies :

Rates Direct and via MarkitWire (DTCC GTR)
Credit Direct (DTCC GTR)
Equities MarkitWire(DTCC GTR)
FX Options MarkitSERV FX (DTCC GTR)
FX NDF’s Direct (DTCC GTR)
Commodities MarkitSERV FX & ConfirmHUB (DTCC), Direct (ICE Vault)


Other than SDR’s, does TraditionSEF report trades to anywhere else?

Yes, TraditionSEF has obligations to submit daily trade report files to the CFTC under Part 16 Reporting Requirements. These files are also reported daily to our website and can be found here. In addition for the purposes of market surveillance, TraditionSEF submits daily aggregated data files (including trades executed) to our surveillance partner, the National Futures Association (NFA). 

Does TraditionSEF store reported trade date, if so, for how long?

TraditionSEF maintains a historical archive of reported trades and associated information as required by Regulation.






Required vs Permitted Transactions

What is a Required Transaction

Required Transactions are transactions in products that have been subject to and approved as Made-Available-to-Trade (“MAT”) by a SEF. Required transactions are subject to the CFTC’s Trade Execution Mandate which stipulates that certain products MUST be executed on, or pursuant to the Rules of a SEF or DCM unless they are over Block size or counterparties to the trade are subject to exemptions. Required Transactions executed on a SEF or DCM must be executed pursuant to certain execution methods, namely Central Limit Order Book, RFQ3 or other execution methods as may be approved by the CFTC.

What is a Permitted Transaction?

Permitted Transactions are CFTC regulated swaps that have not been Made-Available-to-Trade and are therefore not subject to the Trade Execution Mandate or restricted modes of execution.

How Does TraditionSEF Recognize when a Trade is subject to Required or Permitted execution Rules?

For Trading Platforms such as Trad-X (IRS), transaction types are identified by the Product Code. Orders submitted to these product codes are subjected to the appropriate treatment under their status of Permitted or Required.

Are there any instances that a trade (Permitted or Required) being arranged and executed via a US Based intermediary can be executed ‘OFF-SEF’?

Yes, (a) if a trade is in a product that is not subject to the Execution Mandate (i.e. Has not been subjected to nor passed the Made-Available-To-Trade (MAT) process) and is being executed bilaterally between two counterparties, then the trade can be executed away from a SEF (b) If one of the counterparties has an exemption from the Execution Mandate then the trade can be executed way from a SEF (c) If a trade is above Block Size but is in a product that IS subject to the Trade Execution Mandate then the trade may be executed away from a SEF BUT must be executed pursuant to the Rules of a SEF and reported through a SEF.

Block Trades

Does TraditionSEF provide a facility for the Processing of Block Trades?

Yes, operating under the CFTC No-Action Letter 14-118, Tradition SEF provides the capability for Block Trade execution and processing. All Parties to a Block Trade must be on-boarded to TraditionSEF prior to the execution/processing of the Transaction. Please refer to Rulebook Rule 509.

How are block Trades Executed? 

Block trades executed on TraditionSEF, may be executed away from the SEF order book, in the manner of a Permitted transaction. Block trades can also be arranged off-facility and introduced to TraditionSEF for execution.

How does Tradition SEF report Block Trades?

TraditionSEF reports all trades in real-time to the SDR. Trades “flagged” as Block will be held up by the associated SDR and be publicly reported on a delayed basis.

Must I declare a Block Trade prior to execution?

Yes, if you intend to execute a trade in excess of the Block Size limits, you must declare your intent to execute the transaction as a Block prior to submitting the order. If this declaration is not made, the trade will lose its “block treatment” and be publicly reported immediately by the associated SDR.

What if I do a Block size trade without notifying the SEF first?

Trades of this nature will lose their “Block status” and will be reported as large notional trades.

Package Transactions

Does TraditionSEF currently support the execution of Packaged Transactions?

Yes, TraditionSEF supports the execution of Package Transactions in a number of Asset Classes, including those (a) Deemed to be subject to the Execution Mandate and (b) Currently operating under the CFTC No-Action Letter 14-137 and (c) Packaged Transactions in Permitted Transactions that are not currently, or intended to be, subject to the Trade Execution Mandate.

For Block Trade purposes, does TraditionSEF require that all legs of the Package are over the minimum block size threshold(s)? 

Yes as it is a regulatory requirement. As per CFTC, for a Package Transaction to be considered a block trade, all legs of the package must meet their individual Block Size Requirements. For example, in a USD IRS Butterfly transaction (5y v 7y v 10y) the individual legs sizes would be required to exceed $240m, $170m, $120M respectively. 

Does TraditionSEF perform a pre-trade credit check on each leg of a Cleared packaged transaction? 

To the extent that each leg of the package is subject to clearing, yes, each leg of a package transaction is checked individually. 

If one leg of a Package Transaction were to fail to clear, would TraditionSEF resubmit the failed leg?

If the failure was due to a clerical or operational error then yes, TraditionSEF would seek to correct the error and resubmit the failed leg in accordance with CFTC NARL 14-24. If the failure were for “Credit” reasons, unless the failure was due to “sequencing” of the processed legs of the Package Trade, TraditionSEF would not resubmit the failed leg.  In addition, if the Packaged Transaction includes a non-Swap component and on or more legs of the Package is void ab initio, then the non-Swap component of the Package would be void ab initio also.

Does TraditionSEF offer execution of non-swap legs of package transactions?

TraditionSEF will assist in arranging for execution of non-swap legs of package transactions, such as US Treasury (in IRS Spread-Over trades) or other security, through an affiliated Tradition Group Broker-Dealer.

Please provide an overview of the Package Transactions offered with respect to swap vs non swap. Do you have an affiliate broker through which we can transact the UST?

For frequently traded package transactions, such as USD IR Swap Spreads, in instances where TraditionSEF matches a FICC member against a non FICC member, Tradition will introduce its affiliated broker dealer (Tradition Securities and Derivatives LLC (“Tradition Securities and Derivatives”) ) into the transaction to act as the counterparty to the transaction on behalf of the non-FICC member.

Cross Border Implications

If I am NOT a US Person and I am trading with another non-US person, must a trade be executed on the SEF?

Footnote 88 of the SEF Core Principles effectively stated that, if a Transaction is being arranged via a US based multiple-to-multiple facility and the product being traded is deemed a ‘swap’ under CFTC regulations the trade must be executed on, or pursuant to the Rules of, a SEF irrespective of the status of the counterparties.