ISDA Safe. 

Efficient 

Markets 

sifma @ 

lures/a! in Amuica M ANAGED FUNDS 

ASSOC IATION 

SIFMA Asset Management Group, ISDA and MFA Joint Survey of Buy-Side Members on 

Request for Quotes (RFQs) 

In an effort to provide further information to the Commodity Futures Trading Commission as it 

moves toward adoption of a final Swap Execution Facility (SEF) rule, the Asset Management 

Group of the Securities Industry and Financial Market Assoc iation (SIFMA AMG) and the 

International Swaps and Derivatives Association (ISDA) developed a buy-side member survey 

regarding the impact of a requirement to go out to five or more liquidity providers for a requestfor-quote (RFQ) platform to qualify as a SEF. Members of the Managed Funds Association 

(MFA) were also invited to participate in the survey. The survey was sent only to buy-side 

members of these associations; no dealers participated. The vast majority of the 38 responses 

were received from asset managers that manage mutual funds, hedge funds and other 

institutional accounts (e.g., pensions, endowments, foundations), representing over $12. 1 trillion 

of assets under management in the aggregate; other participants included insurance company 

managers, corporate and quasi-governmental entities representing an additional approximately 

$5.6 trillion in assets in the aggregate. A summary of the survey results is provided below. 

I. We asked firms if they have accounts that direct swaps trading with certain counterparties 

that would lead to limitation of the number of counterparties transacted with. 

• 50% of responders have investment guide line restrictions that limit the number of 

counterparty accounts they can transact with. 

• Some respondents indicated that there were other reasons why their accounts can't 

transact with certain counterparties, including directed brokerage arrangements ( 16% 

of pa11icipants ). 

2. We asked firms to indicate the factors that currently cause their firm to limit the number 

of RFQ recipients, with the following being the most common reasons cited: 

• Size of the transaction (87% of participants); 

• Exposing their investment strategy to market participants, who could use this to the 

disadvantage of cli ents (84% of participants); 

• Liquidity (79% of participants); 

• Legal documentation with a limited number of counterparties (58% of parti cipants). 
ISDA Safe. 

EH1cient 

Markets 

sifma @ 

hn•u ted in Americli M ANAGED Fu NDS 

ASSOCIATION 

3. We asked firms how a requirement to submit RFQs to fi ve liquidity providers would 

affect theirfirm. 

• Over 84% of respondents indicated that the RFQ rule would result in increased 

transactional costs. 

• Roughl y 70% of respondents indicated that they would migrate to other markets. 

• 68% of parti cipants would look to trade an instrument that is not required to be SEFtraded. 

4. We asked firms how a requirement to submit RFQs to five liquidity providers would 

affect swaps traded on SEFs. 

• 87% of responding firms advised that their transactional costs would increase and 

76% of participants anti cipated other increased costs (e.g., new legal arrangements). 

• 82% identifi ed that they anticipate spread widening. 

• 76% indicated it would have a negative affect on liquidity. 

• Over 50% of responding firms advised that this requirement would dampen the speed 

at which the swaps market will develop.