Although the CFTC has not yet formally approved SEF Rulebooks, some firms - in this case Tullet Prebon - have recognized that the CFTC is now turning from rule making to enforcement and that their SEF Rulebooks should reflect a strict interpretation of both existing rules and policy objectives. At Direct Swap we applaud this market leading effort.
The accusations highlight increasingly contentious debates surrounding the legal framework for newly created swap execution facilities – electronic swaps broking platforms created by Dodd-Frank just over a year ago. Some believe that Tullett is over-reaching in its interpretation of the CFTC’s Core Principles for SEF trading. Tullett denies the claims and says the reach-through is standard practice and required by the CFTC. “I think it goes without question that individual liability under the US regulatory framework for financial markets has been and continues to be quite standard,” said Shawn Bernardo, CEO of Tullett’s SEF subsidiary. “If a trader engages in wrongful conduct, he or she should know that they may be subject to disciplinary action by a regulator for that conduct. To suggest otherwise would, quite simply, be disingenuous.”