Bennett Kirschner

TRADITION SEF, LLC General Counsel and Secretary

March 14, 2022

VIA E-MAIL (submissions@cftc.gov)

Mr. Christopher Kirkpatrick 

Secretary

Commodity Futures Trading Commission 

Three Lafayette Centre

1155 21st Street, N.W. 

Washington, D.C. 20581

RE: CFTC Regulation 40.2 and 40.6(a) Certification. Request for New Product Certification of 

Tradition SEF’s Interest Rate Swap Asset Class Product Listing and non-substantive 

changes to IRS Product Listing

Tradition SEF Submission No. 2022-02

Dear Mr. Kirkpatrick:

Pursuant to Section 5c(c) of the Commodity Exchange Act, as amended (the “Act”), and Commodity 

Futures Trading Commission (“CFTC” or the “Commission”) Regulations 40.2, Tradition SEF, LLC 

(“Tradition SEF” or “The SEF”) hereby notifies the Commission of revisions to 1) its Interest Rate Swap 

Asset Class Product Listing Terms and Conditions (the “IRS Product Listing Terms and Conditions”) with 

respect to the addition of the following interest rate index underlying the interest rate swaps offered for 

trading: Three-Month Bloomberg Short-Term Bank Yield Index (“BSBY”) benchmark rate; and 2) 

Updates to its Trad-X Platform Supplement to include swaps eligible for admission to trading referenced

to the SOFR, €STR, SONIA indexes; revised minimum order sizes and price increments for USD, EUR 

and GBP swaps; and, the discontinuation of CME/LCH CCP Auctions Additionally, pursuant to 

Commission Regulation 40.6, Tradition SEF is making several non-substantive changes to reflect changes 

to market, clearing venues and updates to reflect ISDA’s revised 2021 IRS swap definitions.

Regarding the addition of BSBY swaps for trading on the SEF, BSBY swaps will be listed with standard 

terms to facilitate portfolio compression. Tradition SEF will offer the option of clearing BSBY swaps via 

LCH and CME. 

Redlined versions of IRS Product Listing Terms and Conditions, and Tradition SEF Trad-X Platform 

Supplement 1are attached hereto as Exhibit A to reflect the changes. Please note that Tradition SEF 

Submission No. 2022-02 includes the following revisions to the IRS Product Listing and Terms and 

Conditions:

Appendix A, “General Information”:

Tradition SEF, LLC 32 Old Slip, 28th Floor, New York, NY 10005 212-791-4500 www.traditionsef.com
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• Eurex AG has been designated as an additional clearing house under Rule S1-102 within Chapter S1-1 of TradX Platform Supplement 1.

• BSBY swaps have been added to Section 2 of the Product List within Appendix A to the Tradition SEF 

Rulebook.

• Clearing information for the designated clearing organizations associated with BSBY swaps has been added to 

Section 5 of Appendix A to the Tradition SEF Rulebook.

• Reference to BSBY swaps and Bloomberg Index Services Limited have been added to Table 2 within Appendix 

A to the Tradition SEF Rulebook detailing the available currencies and the current publisher associated with 

each of the aforementioned reference indexes.

• References have been added to reflect the adoption of 2021 ISDA Interest Rate Swap Definitions where 

appropriate in the swap specifications within Appendix A to the Tradition SEF Rulebook.

• Section 1 of Appendix 1 of Trad-X Platform Supplement 1 has been amended to include 

the addition of interest rate swaps eligible for admission to trading referenced to USD 

SOFR, and USD SOFR OIS.

• Section 1 of Appendix 2 of Trad-X Platform Supplement 1 has been deleted, removing 

CME/LCH CCP Auctions, and Appendix 2 is now reserved.

• Appendix 3 of Trad-X Platform Supplement 1 has been amended to update the 

minimum order sizes and price increments listed for USD Interest Rate Products.

• Appendix 4 of Trad-X Platform Supplement 1 has been amended to update the €STR

OIS product type listed under EURO Interest Rate Swaps.

• Appendix 5 has been added and is reserved.

• Appendix 6 of Trad-X Platform Supplement 1 has been amended to add SONIA OIS as 

a product type listed under GBP Interest Rate Swaps and to delete GBP matched 

maturities of all liquid UK government gilts.

• Section 7 of Appendix 6 of Trad-X Platform Supplement 1 has been amended revise the 

price increments for GBP swaps.

Tradition SEF hereby certifies compliance with applicable provisions of the Act, including The SEF core 

principles (“Core Principles”) as set forth in Section 5h of the Commodity Exchange Act and Part 37 of 

the Commission’s regulations promulgated thereunder. In particular, the products listed in this submission 

adhere to Core Principles 3 (“Swaps Not Readily Susceptible to Manipulation”) and 7 (“Financial 

Integrity of Transactions”) and CFTC Rules 37.300-301 and 37.700-37.702.

Herein, Tradition SEF demonstrates that the contracts listed for trading on Tradition SEF are not readily 

susceptible to manipulation as follows:

BSBY Swaps:

The following oversight and controls to protect against manipulation have been imposed by Bloomberg 

Index Services Limited with respect to the calculation of BSBY:

BSBY uses an advanced curve-fitting methodology to calculate overnight, 1-month, 3-month, 6-month and 

12-month yields. The index is based on aggregated anonymized data anchored in transactions and 

executable quotes sourced from Bloomberg’s electronic trading solutions and trades of short-term senior 
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unsecured bank corporate bonds reported by FINRA. BSBY is based on transactions of instruments used 

by banks to fund themselves, it includes a systemic credit spread in its rate and can be used as a supplement 

to SOFR in the lending market. The BSBY methodology has several protections against manipulation: The 

weight of each transaction is capped at $500 million to help ensure stability and reduce the risk of the rate 

being unduly influenced by any single data point; There is a single issuer cap of 20% to ensure any given 

BSBY tenor is an average rate across an appropriately broad sample; all yields above the 75th volume 

percentile and below the 25th volume percentile are eliminated from the final calculation. BISL provides 

robust governance and oversight over its benchmark offerings. BSBY’s transaction-based inputs, robust 

construction and resilient methodology are designed to meet the high standards of both the BMR and the 

IOSCO principles for financial benchmarks (IOSCO Principles). BISL confirmed BSBY adheres to the 

IOSCO Principles and an independent assurance report is available in the Resources section: 

https://www.bloomberg.com/company/press/bloomberg-confirms-its-bsby-short-term-credit-sensitiveindex-adheres-to-iosco-principles/

In sum, the above-referenced governance, controls and processes implemented by Bloomberg Index 

Services Limited are sufficient to conclude that the BSBY indexes are reliable and subject to robust 

oversight such that swaps referencing them are not readily susceptible to manipulation.

Moreover, listed futures are available for trading on the BSBY index, providing liquidity for hedging in 

BSBY swaps. Additionally, the acceptance of BSBY swaps for clearing by two major Derivatives 

Clearing Organizations is evidence of the market’s acceptance of BSBY as a commercially acceptable 

benchmark rate for U.S. Dollar denominated interest rate swaps.
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Tradition SEF hereby certifies that the products comply with the Commodity Exchange Act and the 

Commission’s regulations promulgated thereunder. No substantive opposing views were expressed that 

were not incorporated into the product amendments. Tradition SEF hereby certifies that it has posted a 

notice of pending certification with the Commission and a copy of the submission on its website (See 

http://www.traditionsef.com/news/), concurrent with the filing of this submission with the Commission.

Should you require additional information related to this submission, please contact the 

undersigned at 212-377-2337 or bennett.kirschner@tradition.com. Please reference Tradition 

SEF Submission No. 2022-02 in any related correspondence.

Sincerely,

Bennett Kirschner

General Counsel and Secretary

Att. 

Exhibit A

Exhibit B
EXHIBITS

A) Appendix A to Tradition SEF Rulebook

Interest Rate Swap Product Listing

B) TRADITION SEF PLATFORM SUPPLEMENT 1