The Commodity Futures Trading Commission (Commission or CFTC) and the Office of Financial Research (OFR) have today entered into a Memorandum of Understanding (MOU) whereby the Commission will share information and data reported on Form CPO-PQR with OFR. Form CPO-PQR is filed by certain Commodity Pool Operators registered with the Commission and contains sensitive data not intended for public disclosure, but rather required for the purpose of regulatory oversight by the National Futures Association and the Commission. Because OFR conducts financial stability-related research, and often publishes reports, briefs, working papers and other types of work product, the MOU provides that OFR may make “Form CPO-PQR Work Product”, OFR or Financial Stability Oversight Council (FSOC) work product that includes or is derived from Form CPO-PQR, available to the public after aggregating, anonymizing, or masking the data.  A previously executed MOU among FSOC members does not include this type of provision for the publication of work product, and as such this is a new question for the Commission to consider.

As a practical matter, I have concerns with the precedent of this MOU as it relates to broad disclosure of entire data sets without a more granular rationale. As a matter of data protection, I expect information obtained by the Commission to have a proven use case.Therefore, I expect any other agency seeking the information we are entrusted to protect to offer a precise utility as justification for the requested data. More specifically, I question what particular functionality Form CPO-PQR is expected to offer OFR. Here, the vast scope of OFR’s jurisdiction should not override the need for specific objectives to be conveyed.

With proper protections, I am supportive of sharing information within the U.S. government to ensure coordinated regulatory policies and oversight, as such authority is specifically provided for in Section 8(e) of the Commodity Exchange Act (CEA). Section 8(e) provides that the Commission may furnish information to another agency of the U.S. Government acting within the scope of its jurisdiction. Yet, Section 8(e) further states that any such information shall not be disclosed by such agency “except in any action or proceeding…to which it, the Commission, or the United States is a party.” Therefore, while I support well-defined intragovernmental information sharing, I am reluctant to endorse another agency publicly disclosing such information. The public disclosure of general statistical information is governed by a separate section of the CEA, Section 8(a), which limits the authority to “publish” such general statistical information to the Commission. If Congress had intended to permit such publication of data to be extended via intragovernmental sharing arrangements, it would have specifically provided for such in Section 8(e) of the CEA where these arrangements are authorized.

In the case of this particular MOU, it is suggested that the Commission is in fact exercising its authority to “publish” the data by way of consent. I am concerned that it is the Commission that is considered to have published the data, but OFR that has developed the work product. Congress recognized that the unique expertise of the Commission makes it the agency to determine appropriate publication of such data, yet under this MOU once Commission staff has consented to answering the narrow question of whether OFR has sufficiently aggregated, anonymized, or otherwise masked Form CPO-PQR information, it is considered “published” by the Commission and OFR is free to disclose what Congress intended to restrict as a responsibility of the Commission.

As officers of the United States Government, we all recognize the obligation to remain vigilant in safeguarding the data we collect, especially sensitive, proprietary and personally identifiable information, such as that contained in Form CPO-PQR. As the markets we oversee are of importance to the financial stability of the nation, and the Chairperson of the CFTC is a member of the FSOC, we have a need to coordinate and share specific information with OFR. However, we can only do so pursuant to Section 8 of the CEA, and here I believe Congress has left very little room for interpretation as to the methods by which such data may be disclosed publicly and by whom. Our adherence to these requirements has never been more critical than in the current environment where data is increasingly important to the market and regulators, and most especially in light of the CFTC’s role within the FSOC.