Release Number 8430-21
CFTC Imposes $650,000 Penalty Against Refinitiv US SEF LLC for Swap Reporting Failures
First CFTC Enforcement Action Charging a Swap Execution Facility with Reporting Violations
September 27, 2021
Washington, D.C. — The Commodity Futures Trading Commission today filed and settled charges against Refinitiv US SEF LLC, a registered swap execution facility, for failing to report certain categories of swap data. The order requires Refinitiv to pay a $650,000 civil monetary penalty and comply with certain undertakings.
The order specifically finds that from at least February 2016 through August 2020 Refinitiv failed to report certain primary economic terms for at least 320,000 swap transactions, as required under Sections 2(a)(13)(G) and 4r(a)(1) of the Commodity Exchange Act and CFTC Regulation 45.3.
According to the order, rather than designing its reporting systems to meet Part 45 requirements, Refinitiv designed its reporting systems to meet the specifications of its Swap Data Repository, which identified certain fields required by Part 45 of the CFTC Regulations as optional.
As a result, according to the order, during the relevant period, Refinitiv failed to report certain swap creation data for hundreds of thousands of trades. The missing swap creation data included Part 45 primary economic terms such as the financial entity status and the U.S. person indicator for each counterparty.
On multiple occasions, Refinitiv knew, or had reason to suspect, that it was not complying with Part 45 reporting requirements, but failed to detect and remedy its noncompliance. For example, Refinitiv acknowledged in its 2013 annual Chief Compliance Officer Report, required by CFTC regulations, that Refinitiv: (1) had failed to report whether and to what extent swaps were collateralized, another Part 45 primary economic term; (2) had reason to suspect that its reporting systems were failing to report other required swap data; and (3) would undertake a compliance review of its reporting systems to address those suspicions.
This compliance review of its reporting systems was completed 10 months later during Refinitiv’s application for full registration and failed to detect Refinitiv’s ongoing reporting failures. As a result, Refinitiv took steps to address its reporting failures only after they were reported to Refinitiv by two of its clients, and reporting failures continued until August 2020. However, Refinitiv then self-reported the ongoing violations to the CFTC.
The order recognizes Refinitiv’s self-reporting, cooperation, and remediation in the form of a substantially reduced civil monetary penalty.
The Division of Enforcement staff responsible for this case are Luke B. Marsh and Paul G. Hayeck, and former staff member Tobias Fischer. Ben DeMaria, Thomas Guerin, David Aron, and Owen Kopon of the Division of Data, and Jasmine Lee of the Division of Market Oversight also assisted with this case.