The Commodity Futures Trading Commission (CFTC) is working towards defining rules for the data that must be submitted to the new swaps data repositories, which are due to be established as part of the Dodd-Frank Act. Speaking at the International Swaps and Derivatives Association (ISDA) regional conference last week, CFTC chairman Garry Gensler explained that the regulator’s recent series of roundtables have been aimed at pulling together rules such as a minimum number of data fields that must be sent to a swap data repository.
The Dodd-Frank Act for the first time sets up a new registration category called swap data repositories and requires registrants – including swap dealers, major swap participants, swap execution facilities and designated contract markets – to have robust recordkeeping and reporting, including an audit trail, for swaps.
“This week we had a very helpful roundtable on these subjects,” explained Gensler. “We anticipate rules in this area to require swap data repositories to perform their core function of collecting and maintaining swaps data and making it directly and electronically available to regulators. We also anticipate rules governing how data must be maintained by registrants and sent to the data repositories. These rules would likely identify a minimum number of data fields that must be sent to a swap data repository, as well as any data included in a trade confirmation. It will be important that swaps data be collected not only when the transaction occurs, but also for each lifecycle event and valuation over its duration.”
He indicated that the regulator is conducting roundtables, such as the one on 16 September to discuss its proposed new ownership and control report (OCR) requirements and other opportunities for dialogue with the community to implement the changes.
Currently, when the CFTC is collecting data from the exchanges, traders are only identified by their trader account number. To more closely identify these parties, the proposed OCR calls for the collection of ownership, control and related information for all trading accounts active on US futures exchanges and other reporting entities. Specifically, OCR data would include entity information including trading account numbers, the names and addresses of accounts’ owners and controllers, owners’ and controllers’ dates of birth and other information necessary to uniquely identify owners and controllers to identify related trading accounts.
Concerns have already been raised by some in the industry about the potentially high cost of these proposals and it is likely that some changes will be made to the current text, once the feedback has been digested by the regulator. Regardless, those operating in the futures market will face some degree of data management system impact from the changes and will likely need to reflect this by investing in their counterparty and entity databases.