CFTC Establishes Working Group For Review Of Swap Transaction Data & Record Keeping

The US Commodity Futures Trading Commission's (CFTC) Acting Chairman, Mark P. Wetjen, joined by Commissioners Bart Chilton and Scott O’Malia, today announced the formation of an interdivisional staff working group to review certain Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term transaction data record keeping and reporting provisions.

The working group, led by the director of the Division of Market Oversight, will formulate and recommend questions for public comment regarding, among other things, compliance with part 45 reporting rules, related provisions, and 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. Acting Chairman Wetjen also has directed the working group to review the public comments submitted in response to this request and make recommendations to the Commission in June. On this basis, whilst today's scheduled public meeting on algorithmic trading, HFT and swap Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term facilities was canned due to winter weather conditions in Washington, rain certainly has not stopped play among these particular bureaucrats.

“The goal of this cross-divisional staff working group is to seek and review public comments on informed questions regarding the swaps data submitted to the CFTC,” Acting Chairman Wetjen said in a public statement today.

“In order for the Commission to enforce the significant Dodd-Frank reforms, the agency must have accurate data and a clear picture of activity in the marketplace. We’ve seen an incredible shift to a transparent, regulated swaps marketplace, and this is an appropriate review to ensure the data we are receiving is of the best possible quality so the Commission can effectively oversee the marketplace," he concluded.

“This working group will provide the crucible to analyze how we collect and utilize critically important derivatives market information,” stated Commissioner Bart Chilton on behalf of the CFTC. “Just repeating ‘transparency, transparency, transparency,’ as a meaningless mantra won’t cut it, we have to actually have the correct, concise, and useful processes in place and functioning for these reform efforts to have teeth.”

Internal support for the implementation of this group was further supported by Commissioner Scot O'Malia, who further added that he is "Pleased that Acting Chairman Wetjen is implementing my recommendation to establish a cross-divisional data team that will begin to review regulatory reporting.”

“By seeking public comment on part 45 and related reporting rules, the staff will develop a better understanding of specific changes that can be made to enhance regulatory compliance and data harmonization and reduce misreporting of data that has undermined the Commission’s ability to use its regulatory data.

In addition to building on the work of the harmonization efforts already underway by the Technology Advisory Committee, this team should carefully evaluate internal solutions that will enhance the Commission's data utilization," he continued.

"I applaud Acting Chairman Wetjen and the staff for their willingness to undertake this timely review of reporting processes and rules,” he concluded, adding further confirmation to the CFTC's commitment to ensuring that companies under its jurisdiction are operating in a transparent manner with little or no margin for falling foul of the now highly comprehensive set of regulations was Mr. O'Malia's conclusion today.

In December 2011, the Commission adopted part 45 of the Commission’s Regulations to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act’s new statutory framework regarding swap data recordkeeping and reporting requirements for CFTC-regulated market participants, including swap data repositories, derivatives clearing organizations, designated contract markets, swap execution facilities, swap dealers, major swap participants and other swap counterparties, a matter which, two years on in July last year, Forex Magnates debated with a series of senior industry figures within the institutional side of the FX business.

In order to ensure that complete swap transaction data is available to regulators, the final rule requires reporting counterparties and reporting entities to submit via electronic reporting swap creation data and continuation data to swap data repositories.