CFTC takes collaborative approach for swaps data

US derivatives regulator the Commodity Futures Trading Commission and the Office of Financial Research have agreed to work together to improve the quality of information reporting to swap data repositories.

US derivatives regulator the Commodity Futures Trading Commission (CFTC) and the Office of Financial Research (OFR) have agreed to work together to improve the quality of information reporting to swap data repositories. 

A memorandum of understanding signed by the two organisations outlines processes by which the quality of data will be assessed to meet the shared goals of creating greater clarity of systemic risk posed by OTC derivatives, in line with global post-crisis regulatory efforts.

The two organisations will also create a staff-level inter-agency group to coordinate the structuring of the project. The Data Quality and Analytics Working Group will also decide on which tools the working group will use for the project.

Speaking of the announcement, CFTC acting chair Mark Wetjen said this collaboration would be critical in improving the data oversight of the regulator to ultimately improve the functioning of financial markets.

Wetjen’s colleague, CFTC Commissioner Scott O’Malia, in London last week, said greater collaboration was needed between regulators. O’Malia, who has spoken out against a number of CFTC rules implemented as part of the Dodd-Frank Act, including the mismatched nature of data reported to various data repositories, said the CFTC would work closer with one of its European counterparties.

“We can’t miss this opportunity to work together, when the US and the EU are facing the same problems at the same time,” he said, adding that he had asked European regulators to recognise each others swap trade repositories and develop means to share data across jurisdictions.

“The urgency for a holistic view of the financial markets, without borders, was underscored by how the financial crisis caught the world by surprise. Data that could have identified systemic risk was fragmented across regulators and nations,” he said.

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