US swaps regulator plans trading data overhaul

Boca Raton, Fla, March 13 Thu Mar 13, 2014 12:00pm EDT

Boca Raton, Fla, March 13 (Reuters) - The U.S. swaps regulator will outline its plan next week to clean up trading data, a top official said on Thursday, as it struggles to make the market less opaque after the credit crisis.

The Commodity Futures Trading Commission, which was put in charge of the $630 trillion global off-exchange derivatives market after the crisis, may come up with a guidebook, or tweak its rules, one of its members told Reuters.

"I had asked for a cross-divisional working group to put together a kind of a fixing list and put it out for comment," Commissioner Scott O'Malia said in an interview.

"That draft is for the Commission right now. I've provided input on it and it should be out next week," he said on the sidelines of a derivatives industry conference.

The agency, whose powers were vastly expanded after the 2007-09 crisis, has repeatedly said a deluge of data has overwhelmed its computers since reporting started a year ago, and that it cannot adequately monitor risk.

The data was so poor, O'Malia plans to say in a presentation later in the day, that the agency would be unable to tell which companies it oversees if the threshold for annual trading volume that determines the cut-off dropped to $3 billion from $8 billion now.

The drop is not expected to happen for at least another year, and will first require a study by the agency, but O'Malia used the point to illustrate the limited grasp the regulator's staff have over the vast new data set.

Global regulators in January highlighted a lack of reliable data as a major concern, five years after the sudden break down in the financial system highlighted the limited insight watchdogs have into bank risks.

In a report to the Financial Stability Board - which groups together supervisors of the G20 nations with the strongest economies - they said countries and companies should make improving data quality a top priority.

The CFTC was put in charge of the swaps trading market as part of the 2010 Dodd-Frank overhaul of Wall Street, and has since written a raft of new rules to make the system less vulnerable to sudden shocks.

The industry, largely unregulated before the crisis, is dominated by large Wall Street banks such as Citigroup Inc , JPMorgan Chase & Co and Bank of America Corp .