CFTC Implements New SWAP Data Reporting Rule

The Commodities Futures Trading Commission (CFTC) took steps to improve swaps data reporting.

The CFTC announced a new rule in a press release.

The Commodity Futures Trading Commission (CFTC) today approved a proposed rule to improve the quality of swap data and to update and streamline regulations related to swap data repository (SDR) operations and governance. The proposed rule is the first rulemaking that is part of the Roadmap to Achieve High Quality Swaps Data, a comprehensive review of swap reporting regulations that the CFTC’s Division of Market Oversight announced in July 2017.

According to the CFTC, here are the improvements as a result of the new rule.

• Update requirements for SDRs to verify swap data with reporting counterparties;
• Update requirements to correct swap data errors and omissions for SDRs, reporting counterparties, and other market participants; and
• Update and clarify SDR operational requirements to ensure that data is available to the CFTC and the public as required by the Commodity Exchange Act.

The rule received approval from several CFTC commissioners. .

“I am pleased to see the first part of the Roadmap issued today. Completion of these proposed changes and the other changes described in the Roadmap will result in more complete, more accurate, and higher-quality data available to the CFTC and to the public; streamline data reporting; and help the CFTC perform its regulatory responsibilities,” said CFTC Chairman J. Christopher Giancarlo.

Rostin Behnam also approved of the rule: “I respectfully concur with the Commodity Futures Trading Commission’s (the ‘Commission’ or ‘CFTC’) approval of its proposed rule regarding amendments to the Commission’s Regulations Relating to Certain Swap Data Repository and Swap Data Reporting Requirements (the ‘Proposal’).  In 2011, the Commission adopted part 49 of the Commission’s Regulations to implement the requirements of section 21 of the Commodity Exchange Act (the ‘Act’ or ‘CEA’).  Section 21 describes the registration regime for and operation of swap data repositories (‘SDRs’) by setting out applicable registration rules, data standards, duties, core principles, and requirements regarding confidentiality and chief compliance officers as envisioned by Congress in the Dodd-Frank Act to implement the key trade reporting provisions laid out at the 2009 G20 Pittsburgh Summit.”

The feeling was not unanimous. Commissioner Dawn Stump was against the rule.

The Commission is publishing for public comment “Proposed Amendments to the Commission’s Regulations Relating to Certain Swap Data Repository and Swap Data Reporting Requirements” (Proposal).  Accurate swap data reporting is vital to our ability to make appropriate policy choices.  I very much look forward to receiving feedback from all parties impacted by this Proposal to assure that the Commission has robust and accurate data, which is a lynchpin of future Commission decision-making.

However, a Latin proverb reads: Qui tacet consentire videtur, ubi loqui debuit ac potuit (he who is silent, when he ought to have spoken and was able to, is taken to agree).  While I share the Commission’s desire for accurate swap data, I do not agree with all the policy and procedural choices in this Proposal. I question certain of the underlying assumptions driving these policy changes, and the promulgation of this rulemaking in isolation and without corresponding changes to other swap data reporting rules.  I am uncomfortable with the lack of details and nebulous description of certain obligations in many parts of the Proposal, which I believe will make it difficult for the public to comment in an informed fashion. And I disagree with imposing immense additional burdens on swap data repositories (SDRs) and all types of reporting counterparties (RCPs), particularly without commensurate streamlining of regulatory obligations in the rest of the Commission’s swap data reporting rule set.