Today, the Commodity Futures Trading Commission (Commission or CFTC) adopts amendments to large trader reports. Ensuring the integrity and transparency of these reports fosters sound derivatives markets by providing the Commission with critical information concerning the largest positional exposures in futures and options markets. I support adopting the final rule, which amends certain provisions of the Large Trader Reporting Requirements for futures and options under Commission Regulation 17.00 (a) and (g) (Final Rule).

Sections 4a, 4c(b), 4g, and 4i of the Commodity Exchange Act (CEA) establish the Commission’s authority to create regulation imposing large trader reporting and recordkeeping requirements on registrants. Part 17 sets out the obligations for reports that markets, futures commission merchants, clearing members, and foreign brokers must provide to the Commission.[1] The Commission’s large trader reporting system has been foundational to ensuring market integrity, fostering price discovery, and promoting hedging utility of futures and options contracts for commercial end-users. The large trader reporting framework has admirably supported the Commission’s market surveillance efforts.

CFTC Regulation 17.00(a) requires reporting firms to report daily position information for special accounts—futures and options trader accounts that exceed certain Commission-prescribed levels—to the Commission, in accordance with the record format and data elements set forth in CFTC Regulation 17.00(g).[2] Data reporting technology has advanced since the time of Part 17’s promulgation such that the current data record format is outdated.

The Commission is adopting the Final Rule to modernize certain technical aspects of the reporting requirements and clarify aspects of the reporting requirements and instructions. The Final Rule will transition reporting format to the Financial Information eXchange Markup Language (FIXML). Additionally, the Commission is updating the data elements to be reported and delegating authority to the Director of the Division of Data to designate a data submission standard. Contemporaneously, the Commission will publish an updated Part 17 Guidebook.

The Commission issued a notice of proposed rulemaking on June 27, 2023 and received twelve substantive comment letters. The Final Rule is responsive to the comments received and reflects thoughtful engagement with market participants—an essential aspect of the notice-and-comment rulemaking process.

Access to more fulsome and reliable data will improve the Commission’s understanding of how traders employ futures and options, enable the Commission to surveil for market integrity in a single market or across markets, and facilitate the Commission’s detection of and enforcement many abusive trading practices.

As I have previously stated:

Appropriately-tailored regulatory disclosure is a powerful tool in identifying vulnerabilities and trends in our markets, mitigating systemic risk, and addressing financial stability concerns.  Disclosure of financial information to market regulators is critical to the regulatory oversight of our financial markets, particularly when such disclosure is accurate, timely, robust, and usable.[3]

Today’s Final Rule supports position reporting that meets these characteristics. Though facilitating effective supervision can engender costs, the important data reported to the Commission plays a crucial role in stemming broader market disruptions.

I commend the work of the staff of the Division of Market Oversight, including Owen Kopon, Paul Chaffin, Chase Lindsey, and Jason Smith, on the Final Rule.