Swap Data Was Supposed to Deliver Transparency. A Decade Later, Regulators Are Still Trying to Use It

For more than a decade, regulators have collected vast quantities of derivatives transaction data through swap data repositories (SDRs) mandated by post-crisis financial reforms. Yet despite the scale of these datasets, transforming reported trade data into meaningful supervisory insight has often proved more difficult than policymakers anticipated.

The move is significant not only because it promises improved regulatory visibility across swaps and security-based swaps markets, but also because it reflects a broader shift toward regulatory data interoperability – an issue increasingly central to global efforts to harmonise derivatives reporting standards.

A Structural Divide in U.S. Derivatives Oversight

The current U.S. reporting landscape is rooted in the regulatory architecture created by the Dodd-Frank Wall Street Reform and Consumer Protection Act following the 2008 financial crisis.

Under the legislation, oversight of derivatives markets was divided between the two agencies. The CFTC regulates reporting for swaps markets, while the SEC is responsible for reporting rules governing security-based swaps.

Although the distinction reflects differences in product structures and market participants, it has also resulted in parallel regulatory infrastructures. Firms operating across derivatives markets must navigate two sets of reporting rules, repository frameworks, and supervisory expectations.

Swap reporting began under the CFTC regime in late 2012 but almost a decade passed before the SEC’s securities based swap reporting (SBSR) came into effect in November 2021. To reduce operational disruption, the SEC has allowed market participants to align many reporting practices with CFTC swap reporting frameworks through temporary compliance relief.

Even so, the dual structure has posed challenges for both regulators and market participants attempting to analyse derivatives activity across markets that increasingly share common counterparties, trading strategies, and risk exposures.

What the MOU Is Designed to Achieve

The new SEC–CFTC agreement seeks to strengthen coordination between the two agencies in several areas, including supervisory consultation, joint oversight of firms operating across both markets and the exchange of regulatory information.

Most notably, the MOU establishes a framework under which the agencies may share derivatives reporting data and related supervisory analysis.

In practical terms, this could allow each regulator to access data collected within the other’s reporting regime, helping them build a more comprehensive picture of activity across swaps and security-based swaps markets.

For regulators that have spent more than a decade building reporting infrastructures, the next challenge is increasingly about how to turn reported data into usable supervisory intelligence.

Data Is Only Valuable If It Can Be Interpreted

However, greater access to derivatives data does not automatically translate into better regulatory insight.

One of the persistent challenges facing trade reporting regimes globally has been data quality and interpretability. Regulators may receive enormous volumes of transaction data, but extracting meaningful patterns from those datasets requires consistent data definitions, lifecycle modelling, and standardised identifiers.

Addressing that problem increasingly depends not only on regulatory coordination but also on the underlying data architecture used to represent derivatives transactions. This is where industry initiatives such as the Common Domain Model (CDM) have gained increasing attention. The CDM is an open, standardised digital model for representing derivatives products and lifecycle events, originally developed by the International Swaps and Derivatives Association (ISDA) and now hosted under the Fintech Open Source Foundation (FINOS) as an open standard project.

Over the past several years, the Financial Stability Board (FSB), working with CPMI-IOSCO, has led a global harmonisation programme aimed at improving the consistency and usability of derivatives trade reporting data, including the UTI, UPI and harmonised critical data elements for trade reporting.

These reforms were designed to enable regulators to aggregate derivatives exposures across jurisdictions and improve the monitoring of systemic risk within global derivatives markets.

Implications for Firms and RegTech Providers

For financial institutions and regulatory technology providers, the implications extend beyond regulatory coordination.

If regulators begin integrating derivatives datasets and applying more advanced analytics to trade repository data, firms may face greater scrutiny of reporting accuracy, data consistency, and lifecycle event representation.

At the same time, the development could strengthen demand for technologies that support standardised regulatory data models, automated reporting processes, and digital regulatory rulebooks.

RegTech providers working with derivatives reporting frameworks – particularly those aligned with initiatives such as the CDM and emerging digital regulatory reporting architectures – may find growing interest from firms seeking to ensure that their reporting infrastructures can operate effectively within increasingly interconnected regulatory data ecosystems.

A Shift Toward Data-Driven Supervision

The SEC–CFTC agreement does not resolve the structural divide between swap and security-based swap reporting regimes. But it does expose a deeper reality: after more than a decade of derivatives reporting reforms, regulators are still grappling with how to use the data they have collected. If the next phase of oversight is to deliver the transparency policymakers originally envisioned, regulators and industry will need to move beyond reporting mandates toward more interoperable data architectures – combining common identifiers, standardised lifecycle models, and digital regulatory frameworks capable of turning raw transaction reports into actionable supervisory insight.