CFTC Announces Formation of Interdivisional Working Group to Review Regulatory Reporting (with Lofchie Comment)

CFTC Acting Chairman Mark P. Wetjen and Commissioners Bart Chilton and Scott O'Malia announced the formation of an interdivisional staff working group to review certain swaps transaction data recordkeeping and reporting provisions.

The agenda of the working group is as follows:

  1. identify and make recommendations to resolve reporting challenges, if any;
  2. review industry compliance with reporting obligations;
  3. consider data field standardization and consistency in reporting among market participants;
  4. recommend additional reporting guidance or requirements, as appropriate; and
  5. explore whether the agency should seek additional regulatory and technology improvements and data analysis expertise.

The working group – led by the director of the Division of Market Oversight ("DMO"), Vincent McGonagle – will recommend questions for public comment regarding (i) compliance with reporting rules under Part 45 ("Swap Data Recordkeeping and Reporting Requirements"), and (ii) consistency in regulatory reporting among market participants. Acting Chairman Wetjen has directed the working group to publish the request for public comment in the Federal Register by March 15, 2014, and to review the public comments submitted in response to this request and make recommendations to the CFTC in June.

Lofchie Comment: This is a very positive sign. Acting Chairman Wetjen is quietly and gradually taking steps (see also, e.g., CFTC Letter 14-01) to clean up the rulemaking mess he inherited. The financial industry spends huge amounts of money – a drag on the economy – to produce data that cannot even be stored by the regulators, much less organized and analyzed in a meaningful way. It will be a positive development for the industry and, more importantly, for the economy, if regulators limit data demands to that which can be collected at a cost that is worth its use. (Unreasonable demands for useless data are by no means a CFTC-specific issue; Form PF remains near the top of the list of data requirements that are so broad and ill-considered that hundreds of millions of dollars are spent producing information that is, in key respects, useless.)

See: CFTC Press Release.