The Commodity Futures Trading Commission (CFTC), citing aninability to fully understand swaps-market data, has begun anoverhaul of information collected by the Depository Trust &Clearing Corp. (DTCC), CME Group Inc., and others.

The top U.S. derivatives regulator released a request forcomment yesterday on about 70 questions on ways to change how andwhich information must be reported to the swap-data repositoriescreated under Dodd-Frank Act rules. The CFTC could later proposechanges to policies intended to help regulators supervise the $693trillion market.

“The data we've received frankly hasn't been clean enough for usto make sense of it as easily and as quickly as we need to be ableto do,” Mark Wetjen, the CFTC's acting chairman, said at a U.S.Chamber of Commerce conference in Washington. “We're prepared tomake corrections if we need to.”

The CFTC and Securities and Exchange Commission were required byDodd-Frank, the 2010 regulatory overhaul, to create rules for thedatabases to ensure authorities can spot risks in the financialsystem. Regulators lacked complete understanding of howinterconnected banks had become through the swaps market before thethe collapse of Lehman Brothers Holdings Inc. during the 2008credit crisis.

The data regulations have been a challenge at CFTC, which isdefending against a lawsuit brought by DTCC over how tradeinformation can be reported. New York-based DTCC said CME'sapproval to have information about swaps reported to its owndatabase is anticompetitive and reduces transparency, and accusedthe CFTC of unfairly favoring Chicago-based CME.

Full Picture

Scott O'Malia, a Republican CFTC commissioner, raised questionslast year about the adequacy of the data rules. The data wasfailing to give regulators a full picture of the swaps market andwouldn't help them detect a loss similar to JPMorgan Chase &Co.'s London Whale trades, he said in March 2013.

“We have a long way to go,” O'Malia said in a March 18 speech.“The commission needs to be precise about what it wants from themarket.”

DTCC is reviewing the agency's request for comment and “looksforward to continue working with the CFTC to support regulatory andindustry efforts to enhance transparency,” Marisol Collazo, chiefexecutive officer of DTCC's data repository, said in a statement.Laurie Bischel, a CME spokeswoman, declined to comment on theCFTC's request.

Data repositories operated by IntercontinentalExchange GroupInc. and Bloomberg LP, the parent company of Bloomberg News, havealso registered with the CFTC.

The case is Depository Trust & Clearing Corp. v. U.S.Commodity Futures Trading Commission, 13-cv-624, U.S. DistrictCourt, District of Columbia (Washington).

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