May 2, 2018

Amir Zaidi, Director
Division of Market Oversight
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581

Re: Proposed Amendments to the CFTC “Embargo Rule,” 17 C.F.R. § 43.3(b)(3)(i)

Dear Mr. Zaidi:

The Asset Management Group of the Securities Industry and Financial Markets Association (“SIFMA AMG”)1 is writing in connection with the Commodity Futures Trading Commission’s (“Commission”) public indications that it intends to propose amendments to certain of its swap data reporting regulations, and its regulations applicable to swap execution facilities (“SEFs”).2

Our comments herein relate to Commission Regulation 43.3(b)(3)(i), generally referred to as the “embargo rule.”3 Specifically—

• We urge the Commission to retain the embargo rule; and

• If the Commission believes that changes to the embargo rule are appropriate, those changes should be tailored to address particular concerns, and closely monitored.

I. The Commission Should Retain the Embargo Rule

The embargo rule prohibits SEFs from disclosing the details of a swap transaction prior to “the transmittal of such data to a registered swap data repository for public dissemination.”4 Some commenters have suggested that the Commission should repeal the embargo rule.

Yet, we believe the Commission’s goal in promulgating the embargo rule remains vital to SEF trading today. The Commission adopted the embargo rule “to ensure that swap transaction and pricing data is disseminated uniformly and is not published in a manner that creates an unfair advantage for any segment of market participants.”5 We are concerned that repealing the embargo rule could undermine this important objective that the embargo rule was adopted to protect.

In the absence of an embargo rule, SEFs or others could monetize data prior to its public dissemination, which would impose additional costs on market users, advantage some market participants over others, and impede the policy goals of real-time public reporting. More specifically, if market participants must pay or meet certain conditions to gain access to the timeliest data, the resulting information asymmetry will disadvantage market participants who do not pay those fees or costs. This means that asset managers, and their clients, could pay more for buy orders and receive less for sell orders because market participants with better information are able to react more quickly.

The embargo rule plays an important role in the public dissemination of real-time priceforming information by swap date repositories (“SDRs”). It serves to assure price transparency and a level playing field for all market participants that trade on SEFs. We therefore urge the Commission to retain the embargo rule.

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1 SIFMA AMG brings the asset management community together to provide views on policy matters and to create industry best practices. SIFMA AMG’s members represent U.S. and multinational asset management firms whose combined global assets under management exceed $39 trillion. The clients of SIFMA AMG member firms include, among others, tens of millions of individual investors, registered investment companies, endowments, public and private pension funds, UCITS and private funds such as hedge funds and private equity funds.

2 See CFTC, Roadmap to Achieve High Quality Swaps Data (July 10, 2017), available here: http://www.cftc.gov/idc/groups/public/@newsroom/documents/file/dmo_swapdataplan071017.pdf; see also J. Christopher Giancarlo, Pro-Reform Reconsideration of the CFTC Swaps Trading Rules: Return to Dodd-Frank at 21 (Jan. 29, 2015), http://www.cftc.gov/idc/groups/public/@newsroom/documents/file/sefwhitepaper012915.pdf (hereinafter, the “White Paper”).

3 See 17 C.F.R. § 43.3(b)(3)(i).

4 Id. at 43.3(b)(3)(i)(A).

5 See Real-Time Public Reporting of Swap Transaction Data, Final Rule, 77 Fed. Reg. 1182, 1200 (Jan. 9, 2012)