Yieldbroker, Australia’s over-the-counter (OTC) interest rate exchange, has become the first foreign-regulated, multilateral swap trading facility to receive long-term approval to access US-based customers.
Yieldbroker says the move secures billions of dollars of trade business, removes commercial uncertainty and is one more step towards achieving the company’s vision of becoming a globally significant platform for trading in Australian and New Zealand dollar interest rate securities.
More than 100 major financial institutions access over 900 debt securities and interest rate derivatives on the Yieldbroker exchange, trading approximately USD200 billion each month.
Founded in1999 by banks in local debt markets, Yieldbroker holds an Australian Market Licence and is regulated by the Australian Securities and Investments Commission (ASIC). The Australian Securities Exchange acquired a 49 per cent shareholding in the business in November 2014.
The approval to operate as an alternative swap execution facility was granted by the US Commodity Futures Trading Commission (CFTC) under the Qualifying Australian Licensed Market regime.
The decision follows a three-year period during which Yieldbroker received a series of short-term no-action relief letters from the CFTC, which had to be continuously extended as each one expired.
Yield broker CEO Richard Swift (pictured) says the decision is important for the Australian economy that connections with international and domestic participants in Australian interest rate markets remain functional and dynamic.
“This decision allows Yieldbroker to continue developing electronic platform liquidity and benefits our participants through greater regulatory certainty, lower costs and reduced levels of operational and compliance risk,” he says. “Across the globe we are seeing greater use of electronic trading platforms and to meet global needs these platforms must honour multiple jurisdictions’ laws and regulations.
“The fact that we are the first foreign-regulated, multilateral swap trading facility in the world to meet rigorous US standards reinforces how well Yieldbroker is positioned to benefit from this trend.”
Oliver Harvey, senior executive leader – market infrastructure at ASIC, says: “The relief the CFTC has provided Yieldbroker is another important step in ASIC's ongoing work to support Australian entities seeking regulatory recognition in foreign markets. Through ASIC’s efforts on regulatory co-ordination, entities like Yieldbroker enjoy continued access to open, fair, orderly and transparent global markets.”