December 22, 2015
Today, CFTC staff is taking an important step toward improving the quality of swap data reporting. This Request for Comment is a key component of the efforts I recently discussed to ensure that the swap data the CFTC receives is accurate, consistent and timely.
Reporting of swaps transaction data was a key goal of the reforms agreed to by the leaders of the G-20 nations, and one of the most important components of the Dodd-Frank Act. We have come a long way since the fall of 2008, when a lack of reporting meant neither regulators nor market participants could assess the exposures or interconnectedness of major institutions. The reforms we have implemented have given regulators better information and market participants greater transparency.
Today, we can assess and monitor swap exposures by participant or product. We can compare cleared and uncleared risk. We are integrating swaps data into our risk surveillance and other functions. And today, market participants have access to pre- and post-trade swap data. You can go to public websites of the swap data repositories (SDRs) and see the price and volume for individual swap transactions in real-time. Products such as the CFTC’s Weekly Swaps Report give an important view of the market. And the availability of this information has fostered innovations, such as tools that provide market snapshots.
But we still have work to do. Creating a system to collect and effectively use data is a significant project. Currently, for example, there is considerable variation in how different participants report the same fields to SDRs, and in how the SDRs themselves transmit information to the CFTC.
In contrast to futures, in swaps there are far more entities reporting, and there is much greater variety in swap transactions and terms. Swaps can also be traded on a variety of platforms or bilaterally. We must have a reporting system that recognizes this variation but still enables us to aggregate where appropriate, so that we can identify trends or concerns.
In our original rules, we purposely didn’t prescribe exactly how each field should be reported – for two principal reasons. First, when the agency issued the reporting rules, we didn’t yet have any data to inform our views. And second, we needed the industry to take coordinated steps toward standardizing its reporting. That, unfortunately, has not happened.
Therefore, over the past several months, CFTC staff has made a dedicated effort to identify a number of priority areas where standardization or clarification is needed. They have carefully considered what fields are critical to our use of the data as well as where there have been reporting challenges.
This Request for Comment solicits public input on 80 enumerated questions addressing 120 data elements. These priority fields include a number of swap data reporting topics, such as counterparties, price, clearing, product, periodic reporting, orders, options, notional amount and many others. The Commission will use these comments to develop proposals that specify the form, manner and allowable values that each data element can have.
This is just one of the many actions the CFTC is taking to ensure accurate and efficient data reporting. We have already proposed actions to clarify reporting obligations with respect to cleared swaps and eliminate unnecessary reporting. I hope we can finalize these rule changes soon. I would also like the Commission to consider changing its rules to provide a greater ability to make sure the data we receive is complete. We are also working to refine swap identifiers so that we can track swaps and swap activity by participant, transaction and product type throughout the lifecycle. In addition, we are leading an international effort to address data harmonization initiatives. And finally, we will continue to take enforcement actions so that participants honor their reporting obligations.
I strongly encourage public comment on these proposals. In particular, I encourage market participants to work together to develop consensus around their comments. We look forward to working collaboratively with all concerned parties to improve reporting of swaps data.
Last Updated: December 22, 2015