The CFTC is mandated to help police the futures arena and its much bigger relative, the swaps market. Collecting and monitoring data on the swaps market has been a vexing problem for the agency, but CFTC Commissioner Scott O’Malia said it will solve it.
“We have four different trade repositories, all of them accepting different data,” he said. “All of them have a different data architecture. So that means aggregating it is much difficult.”
O’Malia, who spoke to JLN’s editor-in-chief Jim Kharouf, said there other complications as well, such as the type of data that is being collected, not to mention the quality of it.
“We’re still wrestling with this issue. It’s very complex,” he said. “And it requires a level of precision that we don’t have at this point. Some of it is technology and some of it is just experience, so we’ll learn more as we go.”
To tackle the issue, O’Malia has reached out to the industry to find out how firms can better report their swaps trading activity. All of this is part of the Dodd-Frank implementation, which now has 68 rules completed. He added that there are end-user issues that involve oral and emailed communication and volumetric options.
“Data is a big feature that we really have to go back and fix,” O’Malia said. “It will involve a rule change, is my guess. And there are some end user needs we need to fix.”
O’Malia said the agency needs to look at how it is gathering data and which data will help them oversee the market.
“We have to look at our own rules and ask, are these the right rules for the commission?” he said. “Does this give us the data we need in the form and format we need? And I think those are some of the issues we are really struggling with.”