Staff of the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight published a Staff Advisory reminding swap dealers and major swap dealers of their obligations to report certain swap data timely and accurately. Staff noted “diverse reporting issues and failure,” with certain types of errors occurring “with some frequency”: readily apparent errors; incomplete reporting; duplicative swap reporting; calculation errors; and reporting delays. Staff recommended utilizing certain measures or processes to enhance reporting quality: data gatekeepers; automated review of reported data; erroneous record checks; and improved changed management practices. Staff also reminded SDs and MSPs that if they utilize third-party service providers to report swap data, they still remain “responsible” for complying with applicable requirements.
Compliance Weeds: Swaps dealers and major swap participants should be routinely monitoring the accuracy and timeliness of their data reporting. Staff’s warning at the end of their advisory is not just ominous sounding: “This advisory should not be construed in any way as excusing past violations or limiting the CFTC’s ability to pursue any actions for reporting violations.” Recently, the CFTC filed and settled charges brought against Deutsche Bank AG, a provisionally registered swap dealer, for alleged reporting errors in connection with its swaps reporting. Deutsche Bank agreed to pay a fine of US $2.5 million and to enhance controls around its swaps reporting to resolve this matter.