OPINION: CFTC Seeks Swaps Reporting Input, Again


The Commodity Futures Trading Commission has opened yet another comment period to review its swap data reporting regulation, which is slated to end on August 21.

Let’s hope that the third time is a charm.

The regulator announced its first comment period at the end of December 2015, which resulted in six comment letter. The CTFC then extended the comment period for two weeks and received another 28 letters from industry members.

I had hoped that the CFTC would have gotten off to a strong start with reporting reform once CFTC Chairman Christopher Giancarlo took the helm.

In a speech just before he was named Acting Chairman, Giancarlo stressed swap reporting reform as the regulator’s second highest priority, just behind providing a choice in trade execution for swaps investors.

“After eight years after the crisis, swap data repositories cannot provide regulators with a comprehensive picture of bank counterparty risk in global markets,” he said at the SEFCON VII conference in Manhattan.

Most filed comments so far break down to do not re-inventing the wheel, be sure to harmonize the CFTC’s work with that of other G20 regulators and make sure the current data fields are well defined before generating new ones.

The International Swaps and Derivatives Association already has its lexicon of product definitions, which ties nicely with the extensible Financial product Markup Language for messaging purposes.

Regarding rule harmonization, it would be a no-brainer to collaborate and leverage the work already done in this space by The Committee on Payments and Market Infrastructure and International Organization of Securities Commission.

The Depository Trust & Clearing Corp. also noted that swaps data repositories could derive many of the data elements proposed by the CFTC’s technical specification from existing elements.

Even if the CFTC follows the industry’s advice, this is going to be a heavy lift for all involved.

Just look at how long the Securities and Exchange Commission has taken to get this far with its Consolidated Audit Trail. Moreover, that project has a standard set of defined data elements as well as no cross-border harmonization requirements.

This reform will not happen overnight, but it would be great at least to start moving on it.

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