Energy Metro Desk Warns of "Storm Brewing among SDRs"
Commentary by Steven Lofchie
In the latest installment of the Energy Metro Desk series "Drums along the Potomac," Editor-in-Chief John Sodergreen discussed recent regulatory developments.
Mr. Sodergreen cited the CFTC's authorization of the National Futures Association to "receive direct access to trade data maintained in the various registered swap data repositories" ("SDRs") as "another example of staff huddling together in a windowless conference room, making decisions in a vacuum." Mr. Sodergreen cautioned readers to heed the "storm brewing among SDRs and others about the [CFTC's] recent request for comments on proposed modifications of data elements contained in the draft specifications."
Honing in on that proposal, Mr. Sodergreen commented that "[t]he modifications the CFTC requests seem to be all over the field, both figuratively and literally, and this is the problem." He cited the example of the CFTC request for 81 new data fields and its plan to modify 39 current fields in a recent proposal.
Commentary
As noted in a recent newsletter, CFTC Commissioner Sharon Y. Bowen praised CFTC staff members for coming up with the new data requirements while holed up in the CFTC's "war room." Her language seems odd because it appeared to advocate a regulatory philosophy that distanced regulators from the markets that they regulated and darkened their view of those markets. By contrast, market participants who were surveyed in Mr. Sodergreen's article seemed skeptical of the rule, though they did agree with Commissioner Bowen that the drafters of the rules seemed to be isolated from the markets.
Mr. Sodergreen is asking a straightforward question: "How will this help market oversight?" It remains unanswered. This is not the first time that a regulator has asked for tremendous amounts of information that would be expensive to provide and impossible for the regulator to use. In many instances, that information was not only useless to regulators but it could not even be collected or stored by them.