Objective 1.3
| Promote transparency by producing and publishing summary market statistics for the futures, options, and swaps markets. |
The term transparency can refer to various levels of information availability in a market. In a narrow sense it refers to the ability of traders to observe order flow on an exchange; that is, to see information such as the size and direction of orders, or the timing of orders. However, transparency can more broadly describe information pertaining to the reporting of price and volume of trading on an exchange and to the composition of participants involved in trading. Such information is important to both direct participants on the exchange, and more broadly to other individuals or businesses that use market information to make business decisions, even though they do not directly transact on the exchange. Market transparency also allows for assessments by market participants and regulators as to whether markets appear to be functioning properly, and the overall robustness of the market.
The Commission has long been committed to assuring that information about markets is broadly and freely disseminated to the public. Currently the Commission publishes periodic reports on market activity and participant composition. These include a weekly Commitments of Traders report, a monthly Bank Participation report, a monthly Index Investment Data report, and a weekly Cotton On-Call report.
With the passage of the Dodd-Frank Act, the Commission now has a responsibility to oversee trading in the swaps market. Part of this responsibility includes assuring that certain trading activity and information produced in these markets is reported, not only to regulators, but generally to the public. The Dodd-Frank Act requires publication, by the Commission, of semi-annual reports summarizing activity in the swaps markets. To fulfill this obligation, and generally to assure that the swaps, futures, and options markets are transparent, the Commission will initiate several strategies to update its current public transparency efforts as well as to launch new transparency efforts with respect to the swaps markets.
Strategy 1.3.1 Develop and publish swaps market reports.
A key goal of the Dodd-Frank Act is to create greater transparency in the swaps markets. The Dodd-Frank Act strives to achieve this goal by bringing standardized swaps onto exchanges and to have information on all swaps reported to swaps data repositories.
The trading of swaps on exchanges and the reporting of all swap transactions to swaps data repositories assures that information in these markets is consolidated in centralized locations. To further assure that the information collected by swaps data repositories is made public, the Commission will collect information on trading and participation in the swaps markets and produce periodic reports summarizing activity and changes observed in the swaps markets.
In creating these reports, staff will need to develop methods to aggregate data on varied but related swaps transactions for the purpose of reporting activity in product categories. For certain markets, such as interest rate swaps, where a relatively high degree of standardization already exists in the underlying assets, such efforts will be fairly straightforward. For swaps markets based on physical commodities, a more complex scheme will likely be required to define product categories and develop methods to aggregate transactions.
| FY 2011 | N/A |
|---|---|
| FY 2012 | Develop and test aggregation methods to group interest rate swap products. |
| FY 2013 | Develop and test aggregation methods to group all commodity swap products under CFTC position limits. Publish swaps market report for interest rate swap products. Publish Dodd-Frank Act required semiannual and annual swaps reports for all interest rate swap products. |
| FY 2014 | Develop and test aggregation methods to group currency, equity, credit, and other commodity swap products. Publish swaps market reports for all commodity swap products under CFTC position limits. Publish Dodd-Frank Act required semiannual and annual swaps reports for all commodity swap products under CFTC position limits. |
| FY 2015 | Publish swaps market reports for currency, equity, and other commodity swap products. Publish Dodd-Frank Act required semiannual and annual swaps reports for currency, equity, and other commodity swap products. |