Most money managers that use swaps didn't trade on newgovernment-mandated platforms yesterday because use of the systemsremains voluntary, according to a poll conducted by Tabb GroupLLC.

The Boston-based researcher and consultant asked 36 investmentfirms that collectively manage more than $6 trillion if they usedswap-execution facilities yesterday, when the U.S. CommodityFutures Trading Commission required the venues to open, accordingto a report. Seventy-seven percent said they didn't use a SEF, 14percent said they did, and 9 percent said they only sent testtrades, Tabb said.

“The swaps market was largely unaffected, with volumes steady,despite the mad scramble to fix technology glitches and smooth theprocess,” according to the Tabb report. “Firms are still tradingswaps, and there will be only a limited migration to swap futuresin this uncertain transition.”

While the CFTC required all SEFs to be compliant with its rulesby yesterday, investors aren't yet required to use them. Mandatorytrading will begin for certain swaps once the CFTC approves thelist of contracts — known as made-available-to-trade requests —each SEF wants to offer. That's keeping most of the industry away,according to Tabb.

“More than three-quarters of the firms polled said they plan tostart SEF trading in the four months from November 2013 to February2014, as both the Made Available to Trade Rule and the mandatorytrading requirement kick in across the last two months of 2013,”Tabb said in the report.

The Dodd-Frank Act of 2010 has provisions designed to moveswaps, which helped fuel the 2008 credit crisis, from largelyunregulated trading negotiated off exchanges to more transparentsystems including SEFs, which are overseen by the CFTC and U.S.Securities and Exchange Commission. The CFTC completed rulesgoverning the transactions in May, opening up competition in amarket with $633 trillion of over-the-counter derivatives contractsoutstanding.

“We're basically voice trading today, we're not trading onSEFs,” Supurna VedBrat, co-head of market structure and electronictrading at BlackRock Inc., said in an interview yesterday. She saidthe firm would begin using the venues once it was mandatory.

There are still some kinks to work out, she said. The abilityfor all SEFs to perform pre-trade credit checks and forclearinghouses to split one cleared trade into smaller chunks thatare then allocated to the many accounts under management by a firmsuch as BlackRock aren't in place, she said.

'Aren't Ready'

“Those pieces of the infrastructure aren't ready, so it becomesproblematic to trade on a SEF if you are trading for a real-moneyaccount,” she said.

Lobbyists representing swaps users asked the CFTC last week fora broad postponement of yesterday's deadline for when SEFs had tobe ready for trading, according to letters they sent the regulator.The CFTC granted several temporary delays related to the datareporting and enforcement responsibilities of the SEFs whiledenying the broad request.

Seventeen SEFs have won temporary requests to operate, includingvenues from Bloomberg News parent Bloomberg LP,IntercontinentalExchange Inc., Thomson Reuters Corp., MarketAxessHoldings Inc., GFI Group Inc., ICAP Plc, Tradeweb Markets LLC, andJavelin Capital Markets LLC.

ICAP is accepting trades put together by brokers that are thenexecuted on the company's SEF, said Chris Ferreri, a managingdirector. “It's a good transition step,” he said. “If you walkedonto our brokering floor, you'd think it was a pretty normalday.”

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