Inaccurate Swaps Data Plagues the CFTC (with Lofchie Comment)

According to a Managed Funds Association ("MFA") blog post and a Wall Street Journal article, the CFTC is struggling to resolve issues regarding inaccuracies with the trade data that the CFTC requires from its market participants. The MFA noted that the lack of quality data could "throw a wrench" into creating a central system to track trades. For example, MFA cited that the notional value of the swaps market was estimated by the CFTC to be about $432 trillion on Thursday, an increase of more than $40 trillion in one week.

Lofchie Comment: For financial regulators, it seems that almost every problem leads to the issuance of rules that require market participants to provide data. The burden to collect data goes largely unexamined. In many cases, regulators are not prepared to make use of the information. This may be due to any number of factors: (i) the technology is not ready, (ii) the information requests are poorly designed or (iii) the information is inherently useless in proportion to the costs of collecting it.

See: MFA Blog Post; WSJ Article.