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CFTC Open Meeting

Commodity Futures Trading Commission

Open Meeting

Thursday, February 20, 2020

Key Topics & Takeaways

Opening Statements

Chairman Heath P. Tarbert

In his opening statement, Tarbert noted that the Commodity Futures Trading Commission (CFTC or Commission) would be considering three proposals to amend real-time public reporting, swap data recordkeeping and reporting, as well as reopen the comment period for certain swap data repository and data reporting requirements. He said the Commission’s goal is to simplify reporting requirements and to create accurate, clear and harmonized swap data and real-time data. Tarbert added that these proposed changes are the first step in enhancing the Commission’s data transparency mandates and that they would benefit end-users while allowing for the Commission to analyze potential systemic risks. Tarbert thanked various CFTC staff, specifically Commissioner Stump, as well as the coordinated efforts from the Securities and Exchange Commission (SEC) and the European Securities and Markets Authority (ESMA).

Commissioner Brian D. Quintenz

In his opening statement, Quintenz expressed his support for the proposals, which he said would help the Commission collect more accurate data. He highlighted that the CFTC’s swap data reporting regime was historic in being the first of its kind but noted that there was a tradeoff in terms of accuracy. Quintenz added that he is pleased with the Commission’s continued global derivatives regulatory efforts and suggested that the Commission consider the usability and clarity of data in the uncleared swaps regime.

Commissioner Rostin Behnam

In his opening statement, Behnam thanked staff for their efforts and echoed the importance of data collection in the post-2008 financial crisis environment. He added that punctual data collection and analysis helps the CFTC make more informed decisions.

Commissioner Dawn DeBerry Stump

In her opening statement, Stump expressed gratitude for these staff-led proposals, specifically thanking the Division of Market Oversight. She emphasized her long-standing work on these issues and the importance of appropriate and adequate data for the Commission to complete its mandates. Stump said she is pleased that the CFTC is working to harmonize regulation, refine data collection elements, reduce the burden on end-users as well as define what is expected for data values and elements in order to remove the “catch-all bucket.” Stump added that the proposal to extend block trade deadlines would help market participants better hedge their positions and address liquidity concerns.

Commissioner Dan M. Berkovitz

In his opening statement, Berkovitz recognized former Commissioners Fred Hatfield and Fowler West, most notably West, for their work in allowing for CFTC Commissioners dissents to be published. Berkovitz continued by expressing his support for the proposals to help standardize swap data collection. He echoed that more accurate information benefits the Commission’s ability to analyze risks and oversight of the markets. Berkovitz expressed concerns about the proposal to delay block trade reporting for 48 hours, adding that this provision could impede price discovery improvements. He concluded by thanking the staff for providing pragmatic solutions to improve market transparency.

Presentations

Staff Presentation: Proposed Rule – Amendments to the Real-Time Public Reporting Requirements (Part 43)  

Staff:

  • Dorothy DeWitt, Director, Division of Market Oversight
  • Meghan Tente, Division of Market Oversight
  • Benjamin DeMaria, Division of Market Oversight
  • Matthew Jones, Division of Market Oversight
  • Kate Mitchel, Office of Data and Technology
  • David Aron, Division of Market Oversight
  • Richard Mo, Division of Market Oversight
  • John Coughlan, Office of the Chief Economist
  • John S. Roberts, Office of the Chief Economist

DeWitt thanked the staff for their work on these proposals. She proceeded to explain that the proposals stem from the Commission’s work dating back to 2012 to achieve high-quality swaps data. DeWitt opined that these proposals would help streamline and standardize the reporting system for the public and would clarify data for market participants. She emphasized that it is critical for the reporting system to be clear, simple and user-friendly. DeWitt added that the staff worked with participants inside and outside the CFTC to reflect global standards for sound derivatives regulation.

Commission staff explained that the proposal would amend Part 43 to enhance price discovery and to amend the time delay public dissemination. They explained that the rule would harmonize global aggregation, enforcement, and supervision for market participants as well as help the Commission assess systemic risks. Further, staff noted that the proposal would adjust the time delays for block trade rules. However, staff explained the proposed rule would not address mirror swaps reporting, although data collection for mirror swaps would still be required under Part 45. In conclusion, staff emphasized the Commission’s commitment to its role on the Legal Entity Identifier Regulatory Oversight Committee (LEI ROC).

Final Vote:  Proposed Rule – Amendments to the Real-Time Public Reporting Requirements (Part 43)

The proposed rule was unanimously approved.

Staff Presentation: Proposed Rule – Amendments to the Swap Data Recordkeeping and Reporting Requirements (Part 45)

Staff explained that the proposal would amend Part 45 to standardize swap data, adopt international technical standards across borders and reduce regulatory burden. Staff explained that the proposed rule would help the Commission better regulate the swap data repositories (SDRs) and address challenges for counterparty collection standards. Staff continued that the changes in the proposed rule would provide cleaner and more standardized data that will help in securing more accurate information, providing better reports, and assisting the Commission’s policy decisions and oversight. The proposed rule stipulates that reporting for new swaps be with a unique action identifier (UTI) rather than a unique swap identifier (USI).

Q&A

Chairman Tarbert asked about the role the CFTC has in relation to the LEI ROC. DeMaria highlighted that the Commission has worked on these proposals since 2012 alongside various market participants and regulators. He added that the announcement for the three-proposal roadmap occurred in 2017 and the Commission has worked to harmonize and streamline the reporting requirements since that announcement. Mo stated that the LEI ROC is composed of 90 members from over 50 countries and that the CFTC works with them as well as other major jurisdictions, including the European Union (EU), for purposes of harmonization.

All the commissioners, expect Stump, asked about the advantages and disadvantages of the 48-hour delay for block trades, and how the delay and these proposals compare to Europe. Jones added that the proposal is meant to be more consistent with the EU. Tente added that the Division of Market Oversight will continue to monitor the public commentary in the EU in order to make informed decisions for final proposals. She stated that adopting a new time delay would not harm the U.S market.

Quintenz asked about cross-jurisdiction between the CFTC and SEC and about harmonization efforts. Tente said initial harmonization efforts began roughly 18 months ago and since then, the CFTC has worked with the SEC to share information for where the proposals were going in terms of pricing information and swap categories.

Berkovitz asked Tente to explain the technical specifications of the reporting requirements. She responded that the proposals standardize, format, and harmonize data requirements for Part 43 and 45 data elements. She stated that DMO will publish technical specifications, pursuant to delegations of authority, to mandate technical standards for reporting requirements.

Berkovitz asked if the proposals would help the Commission collect data and help measure systemic risks. He also asked how the data would help the CFTC with oversight and how the market would benefit. Tente responded that the data would be used for different purposes throughout the Commission and the goal is to optimize each division usage and share this data across teams. Coughlan said that the market data would help the Commission’s goal of increasing transparency and assist in the identification of emerging trends. Coughlan added that in many ways, the data would help make CFTC infrastructure cleaner.

Final Vote:  Proposed Rule – Amendments to the Swap Data Recordkeeping and Reporting Requirements (Part 45) 

The proposed rule was unanimously approved.

Staff Presentation: Reopening of Comment Period – Certain Swap Data Repository and Data Reporting Requirements (Part 49 Verification)

Staff explained that reopening the comment period for Part 49 is to allow for all three proposals to work in tandem. They added that previously submitted comments are still valid and can be amended if needed.

Final Vote: Reopening of the Comment Period – Certain Swap Data Repository and Data Reporting Requirements (Part 49 Verification)  

The proposal was unanimously approved.

Closing Remarks

Chairman Heath P. Tarbert

Tarbert concluded by stating that the Commission should commit to getting the balance of transparency and liquidity correct. He said that the CFTC will best consider how to organize itself to utilize this market data and achieve its mission.

Commissioner Brian D. Quintenz

Quintenz stated that these improvements are needed and that the increased data requirements will help inform the Commission about the markets.

Commissioner Dawn DeBerry Stump

Stump emphasized the importance of these rules and harmonization. She said she would continue to push forward on these improvements and monitor margin data and SDRs. Stump expressed hope to implement and aggregate high-quality data and for other regulators to lead on harmonization of their data sets.

Commissioner Dan M. Berkovitz

Berkovitz highlighted that this was a productive meeting and reiterated his commitment to robust discussions and meetings to improve the Commission’s decision making.

For more information on this event, please click here.

For an archive of past SIFMA hearing coverage, please click here.