Swap Execution Facilities (SEFs)

A Swap Execution Facility (SEF) is an electronic platform where traders, such as financial institutions and corporations, can buy and sell derivatives known as swaps. Swaps are agreements to exchange financial payments over time, often used for managing risk. SEFs promote transparency and standardization in these markets by providing open, regulated environments for trading, which helps ensure fair pricing and reduces risks of manipulation. They are mandated by regulators for certain types of swaps after the 2008 financial crisis to improve market stability and protect investors.