MFA requests no action from CFTC on invoice spreads

MFA submitted a targeted no-action request to the CFTC Staff seeking narrow relief to permit electronic trading of invoice spread package transactions in the US.

Invoice spread packages - comprised of an interest rate swap and a Treasury future - are a widely used risk management tool, but currently trade through manual, voice-based processes (i.e., the telephone) rather than on modern electronic platforms.

The CME effectively prevents invoice spread packages from being executed electronically where the swap leg is traded on, or subject to the rules of, a SEF. These transactions as a result are excluded from transparent, competitive electronic markets despite strong market demand and despite broader Commission policies favoring electronic execution, competition, and transparency in the swaps market.

MFA's request asks the CFTC staff to issue targeted no-action relief from the SEF definition for electronic platforms that exclusively offer invoice spread packages.