Swap Execution Facility - SEF


DEFINITION of 'Swap Execution Facility - SEF'

A trading system or platform that enables many participants to execute or trade swaps. A swap execution facility would allow for greater transparency and would be a significant shift in the way derivative trading is made. The Dodd-Frank Act lays the foundation for this change of derivative execution.

BREAKING DOWN 'Swap Execution Facility - SEF'

It is defined by the Dodd-Frank Act as "a facility, trading system or platform in which multiple participants have the ability to execute or trade swaps by accepting bids and offers made by other participants that are open to multiple participants in the facility or system, through any means of interstate commerce."

As of May 2011, security-based swaps are traded exclusively in over-the-counter markets with little transparency or oversight. As a result, the expected role of the SEF would allow for transparency and provide the tools for a complete record and audit trail of trades.

  1. Dodd-Frank Wall Street Reform and ...

    A compendium of federal regulations, primarily affecting financial ...
  2. Stock Swap

    The exchange of one asset for another. A stock swap occurs when ...
  3. Spread

    1. The difference between the bid and the ask price of a security ...
  4. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  5. Offer

    1. When one party expresses interest to buy or sell an asset ...
  6. Bid

    1. An offer made by an investor, a trader or a dealer to buy ...
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