Monday, December 18, 2023

CFTC proposes amendments to swap data and real-time reporting rules

By Lene Powell, J.D.

The Commodity Futures Trading Commission has proposed amendments to CFTC regulations regarding real-time public reporting and swap data recordkeeping and reporting. The proposed amendments would extend a unique product identifier and product classification system (UPI) to the “Other Commodities” asset class. The proposal would also add new data fields to existing reporting provisions to promote international harmonization and further CFTC surveillance and analysis activities.

“This effort will bolster the CFTC’s ability to monitor micro and macro risk and identify illegal conduct,” said CFTC Chairman Rostin Behnam. “In addition, today’s proposal will promote international harmonization and market resilience, and ensure that the CFTC continues to receive accurate, complete, and high-quality data on swap transactions.”

The CFTC released a voting draft: 17 CFR Part 43 Real-Time Public Reporting Requirements; 17 CFR 45 Swap Data Recordkeeping and Reporting Requirements, RIN 3038-AF26, December 15, 2023.

The proposal will be open for comment for 60 days after publication in the Federal Register.

UPI for “Other Commodities.” Global regulators, including the CFTC, overseeing major derivatives jurisdictions and markets work together to develop global guidance on the definition, format, and usage of key OTC derivatives data elements reported to trade repositories (TRs), including the unique transaction identifier (UTI), unique product identifier (UPI), and other critical data elements (“CDE”).

The CFTC previously issued an order designating a UPI to be used in swap recordkeeping and data reporting for the Interest Rate, Credit, Foreign Exchange, and Equity asset classes. UPIs for these four asset classes are expected to be used by no later than January 29, 2024.

The December 15 proposal would extend the UPI to the Other Commodity asset class in the future.

New data fields. The CFTC is also proposing to add and further standardize the required data elements and definitions set out in the Data Element Appendices of Part 43 and 45.

Additional data elements would:
  1. Supplement the UPI Reference Data Library with additional data elements from the 2023 CDE Technical Guidance;
  2. Add necessary information and address reporting quality issues; and
  3. Further facilitate the standardization of data elements.
The CFTC also issued related technical specifications accompanying the proposal.

Commissioner statements. Commissioner Kristin Johnson expressed support for the proposal.

“The new proposed rule furthers the Commission’s ongoing duty to effectively monitor the swaps market by promoting international harmonization, implementing unique product identifiers (UPIs) and allowing for geographic masking,” said Johnson.

Commissioner Summer Mersinger supported the UPI portion of the proposal, but expressed concerns about requiring new data fields.

“I have serious reservations … about the Commission taking the opportunity to also propose requiring the reporting of several new CFTC-specific data elements that are not required by many other jurisdictions,” said Mersinger.