If 2013 was the year we spent forming our responses to the new rules for the derivatives industry, then 2014 will be the year we see if we got it right. Central to this will be how liquidity is dispersed amongst the new SEF platforms that have emerged in response to Dodd-Frank Title VII. The aim of the regulators is, as always, a noble one – to make derivatives safer by forcing bilateral OTC contracts to be cleared centrally and, if possible, traded electronically too. And yet, despite the fact that many of the key dates are only days away, much still seems unresolved. In particular, how will liquidity be re-aggregated across the multitude of SEFs that have applied to the CFTC for membership? It seems unworkable for the buy-side to maintain screens for each of these, and anyway how will they know which type of liquidity is lurking where. Another problem is whether SEFs really will provide impartial access to their liquidity as the CFTC claims.

Just as we saw with cash equities in the US and Europe it’s no use being at the back of the queue when it comes to aggregation or smart routing. Focussing on unilateral SEF access is an easy way to think you are entering the race, but the firms that offer true aggregation will be the winners.