WASHINGTON Jan 18 The top U.S. derivatives
regulator gave itself 45 more days to decide in a row between
two rival financial groups fighting over potentially lucrative
swaps reporting data.
The Commodity Futures Trading Commission (CFTC) said it
needed more time to consider "novel or complex issues" that have
come up as a result of new rules it has drawn up to enforce the
Dodd-Frank law that tightened financial regulations after the
The fight, which has pitted Wall Street against Chicago's
powerful commodity traders, is about swaps trading data that
will need to be made available to regulators - and partially
also to the wider public.
Data reporting is a central tenet of new global rules to
regulate the $650 trillion swaps industry, drawn up after the
2007-09 financial crisis brought to light systemic flaws in the
market, including a lack of data.
The Depository Trust & Clearing Corporation (DTCC), which
performs back-office functions for banks, is blaming rival CME
Group for sending all client trading data to its data
warehouse, or Swap Data Repository (SDR).
Clients should have the choice where their data go, DTCC
says, and the plan of the CME - which operates the world's
largest futures exchange - contravenes the gist of the new
legislation, and risks fragmenting the data.
The conflict heated up two days ago, when the DTCC
threatened to sue the CFTC if it vetted the CME's plan, laid
down as rule 1001 in the CME's rule book.
Rule 1001 says that any transaction that runs over its
clearing house will be reported to its own swaps data
repository. If a client chooses, CME will also share the data
with Intercontinental Exchange's SDR or the DTCC.
Outsiders say the conflict is about who will be the dominant
swaps data warehouse and generate more revenue, making the data
more valuable and in turn lure more clients.
Under new global rules, swaps will need to be traded on
exchange-like platforms, with central clearing houses standing
in between buyers and sellers to reduce risk.
LCH.Clearnet, which is being bought by the London Stock
Exchange, dominates interest rate swap clearing, while
the Intercontinental Exchange is the biggest player by
far in clearing credit default swaps.
The CME has no such dominant position in either of these two
huge products, but could still build up substantial market share
in new areas that will need to be cleared in the future because
of the tighter rules.
Unlike the CME or ICE, DTCC does not offer clearing
services. Instead it is relying on LCH.Clearnet to receive
sufficient data in its SDR.