CFTC Shines Light on Swaps Market with ‘Swaps Report’

The U.S. Commodity Futures Trading Commission (CFTC) on Wednesday issued for public comment a new “CFTC Swaps Report” that tries to pry the lid off the “dark swaps market.”

The CFTC Swaps report aims at market transparency. An draft of what the report, what it will look like, along with the data it will contain, is now available at the CFTC Website.

The report offers  a “comprehensive view of the size, risks, and activities in the swaps market.” It is important to note, too, that the CFTC Swaps Report goes above and beyond the mandate of the Dodd-Frank Act. Dodd-Frank required only an annual or semiannual report. The CFTC Swaps report is proposed to be issued weekly, on Wednesdays.

“For years, the public has benefited from the futures market data we have published in our Commitment of Traders reports. Our goal is to provide similar transparency to the public for the swaps market. The proposed CFTC Swaps Report will build upon the increased transparency reforms by aggregating swaps market data and presenting it on a regular basis,” CFTC Chairman Gary Gensler said in the a statement.

Data Sources for CFTC Swaps Report

As proposed, the CFTC reports draw data “voluntarily” from swap data repositories (SDRs), in this case DTCC. The report also includes voluntary data from a potential SDR that has not been registered, as well information from  surveys and several “external” data sources.

The data contained in the report is robust, and it remains to be seen whether House Republicans will chide the CFTC for going above its Dodd-Frank mandate. As it stands, the report contains estimates of the notional amount of swaps outstanding in each asset class and each product within an asset class, as well as estimates of the total weekly swap transaction volumes in four asset classes: interest rates, credit, equities, and commodities.

If the data in the report has been volunteered – notably by DTCC, who has recently stepped into a brewing lawsuit between CME and the CFTC – how will the data be collected in the future? The information will come from the data reported to SDRs from swap execution facilities (SEFs), major swap participants (MSP), and other swap counterparties.

Read the statement here.




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