SIFMA AMG Submits Comments Regarding Review of Swap Data Recordkeeping and Reporting Requirements

The Asset Management Group of SIFMA (“SIFMA AMG”) submitted comments to the CFTC regarding its request for review of CFTC Rules Parts 43, 45, 46 and 49 (the “Swap Reporting Rules”), which collectively set forth requirements for swap data recordkeeping and reporting, as well as swap data repository (“SDR”) operations and data. 

SIFMA AMG highlighted its concerns with the Swap Reporting Rules as implemented to date, stating first that, as a basic principle, asset managers should, but do not, have access to swap trade information reported to an SDR by a dealer for clients on whose behalf a manager is acting. 

Additionally, SIFMA AMG said, it believes that the CFTC can improve the quality of swap data being reported by establishing uniform standards that would allow the CFTC and other global financial regulators to compare data across multiple SDRs easily.  To harmonize the swap data reporting requirements on a cross-border basis, SIFMA AMG also recommended the development of these uniform standards in conjunction with those being implemented in jurisdictions outside the United States. 

More specifically, SIFMA AMG requested that the CFTC work with each SDR to ensure the following:

  • asset managers have the ability, if they so choose, to review SDR-reported trade information for trades executed on behalf of clients, or otherwise process such information in an automated fashion;
  • client trade information is made available to asset managers in an easily accessible, easy-to-read format, without the client’s trades, including those placed by other managers, being exposed to unauthorized parties;
  • trade information is not deemed verified merely by the passage of time;
  • confidential client trade information is not provided to third parties without the asset manager’s or its client’s consent; and 
  • consistent specifications and reporting fields are utilized to harmonize reporting requirements across jurisdictions and ensure the interoperability of such information.

Lofchie Comment: Both the SIFMA AMG letter and the ISDA letter object to the ability of the Swap Data Repositories (“SDRs”) to resell the trade information that is reported to them. There are certainly good reasons why the SDRs should not be able to resell information transactions to which they are a party. However, if the SDRs cannot resell trade information, it raises a question of the business rationale for serving as an SDR. It also raises the question of how best to finance the activity. Acting as an SDR appears to be a governmental function, since there is no apparent way to make money in the role. Query: if resale of trade information were to be prohibited, what is the business rationale for serving as an SDR?

See: SIFMA AMG Comment Letter; ISDA’s Response to the CFTC’s Request for Comment on Part 45 and Related Provisions of the Swap Data Reporting Rules.
Related news: CFTC Publishes Request for Comment on Swap Data Recordkeeping and Reporting Requirements (Fed. Reg.) (March 27, 2014); CFTC Announces It Is Requesting Public Comment on Swap Data Reporting Rules (Pre-Fed. Reg.) (March 20, 2014); CFTC Announces Formation of Interdivisional Working Group to Review Regulatory Reporting (January 22, 2014).