10.01.2020

Morgan Stanley Pays $5m For Swap Data Reporting Failures

10.01.2020

The Commodity Futures Trading Commission today announced that it has filed and settled charges against Morgan Stanley Capital Services LLC, a provisionally registered swap dealer, for failing to comply with swap data reporting obligations.

The order requires Morgan Stanley to pay a $5 million civil monetary penalty and to retain a qualified outside consultant to verify its remediation of the root causes of the 29 swap data violations set forth in the order.

“This case demonstrates once again the importance of complying with the CFTC’s swap data reporting requirements,” said Division of Enforcement Director James McDonald.  “The CFTC will continue to scrutinize closely entities that do not meet their reporting obligations and, as appropriate, will continue to bring cases in this area.”

Case Background

The order finds that since December 31, 2012, Morgan Stanley inaccurately reported swap data for at least approximately 3 million swaps, as required under Section 2(a)(13)(F) and (G) of the Commodity Exchange Act and CFTC Regulations 43.3(a), 45.3, 45.4, 45.5, and 45.6. The errors included, among others, failures to report accurate primary economic terms data fields, including: Legal Entity Identifier, Unique Swap Identifier, notional amount, execution venue LEI, and price notation. In addition, Morgan Stanley reported nearly half of its swaps for one asset class outside of the time parameters required by CFTC Regulation Part 43.

The order recognizes Morgan Stanley’s cooperation with the Division of Enforcement’s investigation in the form of a reduced civil monetary penalty.

The CFTC thanks and acknowledges the assistance of the National Futures Association in this matter. Thomas Guerin, David Aron, and Meghan Tente from the Division of Market Oversight, as well as Robert Stowsky from the Office of Data and Technology, also assisted with this case.

The Division of Enforcement staff members responsible for this case are Amanda Burks, Philip Tumminio, Kara Mucha, Erica Bodin, James H. Holl, III, and Rick Glaser.

Source: CFTC

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