I support the proposed amendments to the Reporting and Information Requirements for Derivatives Clearing Organizations (DCOs).

One of my priorities as Commissioner is to make progress on what’s in front of the CFTC right now without taking too long.  Today’s proposal does just that, by proposing to fix an issue that arose two years ago in a prior Commission rulemaking.

There have been CFTC rules in the past where industry has been unable to implement the requirements because they did not fully account for market structure or operations.  In many cases, the CFTC responds by getting stuck in an endless cycle of expiring and extending no-action relief until the rules are fixed to reflect reality, which sometimes never happens.

In this case, in January 2020, as part of a broad set of updates to its regulations applicable to DCOs, the Commission amended the daily reporting requirements for DCOs to require certain information at a more granular level than DCOs had ever been required to report.[1]

When the rules were finalized, CFTC staff learned of industry concerns about the ability of futures commission merchants to provide this information to DCOs.  As a result, Division of Clearing and Risk staff issued a no-action letter extending the compliance date for this reporting requirement in order to resolve this issue.[2]  Staff has already extended this relief once when the rule still had not yet been fixed.[3]

Thankfully, today’s proposal would respond to the concerns raised by industry and fix the problem.  It is an example of how the Commission can make progress on the many outstanding, necessary fixes to its rules.  I thank and applaud the talented staff in the CFTC’s Division of Clearing and Risk on their efforts, and I encourage the Commission to do so in other areas as well.

The notice of proposed rulemaking also makes certain other improvements to the DCO reporting and information requirements.  Specifically, the proposed amendments would, among other things, update information requirements associated with commingling customer funds and positions in futures and swaps in the same account, address certain systems-related reporting obligations regarding exceptional events, revise certain daily and event-specific reporting requirements, and include in an appendix the fields that a DCO is required to provide on a daily basis.

I look forward to receiving comment on these issues.  I encourage commenters to comment on whether the proposed rules are clear and impose any new undue costs and obligations on our market participants.  I will carefully review comments with an eye toward ensuring the proposal ensures consistency with our statutory mandate, and properly balances the costs and benefits of the Commission’s actions.