Public Statements & Remarks

Statement of Commissioner Caroline D. Pham in Support of Notice of Proposed Rulemaking for Large Trader Reporting Requirements Under Part 17

June 07, 2023

Today, the Commodity Futures Trading Commission (Commission or CFTC) is considering whether to propose revisions that would update the outdated large trader reporting submission standards in Part 17 of the Commission’s regulations.  I am pleased to support this proposed rulemaking because the CFTC relies on its large trader reporting data to generate its weekly Commitment of Traders (COT) Report and to carry out our important market surveillance functions.

Part 17 is the CFTC’s regulatory framework that outlines the reporting obligations for clearing members, including futures commission merchants (FCMs) and foreign brokers, collectively known as reporting firms.  Part 17 requires these reporting firms to submit daily trade data to the CFTC, which includes data on open interest, positions held, and other relevant position information on futures and options on futures.

This framework allows the CFTC to maintain an up-to-date and accurate picture of the markets, ensuring that market participants and end-users have the necessary information for price discovery and risk management.  By regularly collecting and publishing this market data through the CFTC’s COT Report, Part 17 helps maintain market integrity and fosters transparency, providing valuable insights into market trends and dynamics.

The COT Report has been vital to our derivatives market since its inception in 1962.  The report provides a weekly summary of the open interest positions held by various categories of market participants, including commercial traders, non-commercial traders, and nonreportable positions.  By understanding the positions held by commercial and noncommercial traders, market participants and end-users can better manage their risk exposure, assess the supply and demand fundamentals that drive price movements, and gauge the overall sentiment in markets, enabling market participants to make informed decisions about their own positions and strategies.

Part 17 data is also used by the CFTC to monitor market activities and to detect potential fraud, market manipulation, and position limit violations.  Collecting position data that accurately reflects the full picture of a market participant’s position also enables the CFTC to assess the financial risks presented by large customer positions to registrants such as FCMs, and derivatives clearing organizations (DCOs).

As we deliberate today on the proposed rule to amend Part 17, it is crucial to remember that we should periodically update our reporting rules as needed to reflect developments in the derivatives markets, while ensuring such updates do not cause disruption to the CFTC’s weekly COT Report or our market oversight.  And in the rulemaking process, the Commission must give fair consideration to every alternative to ensure that our efforts to enhance market transparency do not unnecessarily increase the regulatory burden and costs for market participants, particularly end-users who are already dealing with inflation, rising interest rates, and increased costs for inputs.  I often say that we are not regulating in a vacuum, and the Commission must take into account real-world considerations and the realities of implementing significant changes to systems, operations, and processes.

To that end, I’m pleased that the proposed implementation period is one year from publication of the final rule, and encourage commenters to note if this is not enough time.

The COT Report is an invaluable tool in the derivatives market, providing transparency and aiding in price discovery and risk management for market participants and end-users, and enabling the CFTC’s market surveillance and oversight mission.  I’d like to recognize and thank the following CFTC staff members: Owen Kopon and Paul Chaffin in the Division of Market Oversight, James Fay in the Division of Data, and Daniel Prager in the Office of Chief Economist, for their critical work on these important requirements.