As part of its endeavour to improve transparency within the swaps market and in a follow up to the passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the US Commodity Futures Trading Commission (CFTC) is asking firms to provide feedback on 30 areas of change including the regulatory proposals related to swap data repositories’ registration standards. The new standards for the submission of reference data sets to the repositories will require firms to alter their data supply chains by adding in additional cross referencing and data quality checking steps.
These repositories will therefore take the data that is generally held by counterparties and often stored in proprietary systems in various formats with different data fields and turn it into standardised and complete data sets. However, this data will not replace that being used by individual counterparties, counterparty data will instead need to be reconciled and cross referenced to the trade repository data, adding another layer of data processing to the data supply chain.
The CFTC is therefore looking for feedback from the industry about the impact of these changes, including the potential costs of altering current data management systems. Similar proposals are on the table in Europe and firms were given the opportunity to provide feedback to the Committee on Payment and Settlement Systems (CPSS), following the publication of a consultation paper on the subject in May.
Under the data title, the CFTC is also looking for similar feedback on data recordkeeping and reporting requirements, and the challenges of real-time reporting. Both of these will put pressure on firms’ legacy data architectures, as they will need to meet regulators’ increasingly frequent and granular reporting requirements, sometimes even on an ad hoc basis.
The regulator has said it will use the industry feedback it receives to help it write rules to regulate the OTC derivatives marketplace. We suggest you get writing in.
The full list of 30 items for comment are available to view on the CFTC website here.