CFTC Calls for Comments for New SDR Rules
Mark P. Wetjen,
acting chairman,
CFTC
The CFTC is taking its first major step in an overhaul of its swap data recordkeeping and reporting requirements with a call for public comment. The swaps data gathering is mandated by provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
This step follows the CFTC recently acknowledging that its first attempt at a swaps transaction data reporting system is broken. Mark P. Wetjen, the acting chairman for the CFTC, and his fellow commissioners formed an interdivisional staff working group in January to reassess the regulator’s swaps data-gathering processes. Most observers say the new working group is likely to serve as a catalyst for a much-needed overhaul of the regulator’s SDR efforts.
“I am confident that the responses to this release will inform the Commission as it considers how best to ensure that it receives the information necessary to effectively oversee the derivatives marketplace,” Wetjen said in a statement.
Dodd-Frank requires reporting counterparties and reporting entities to submit swap transaction data to swap data repositories via electronic reporting to enable the CFTC to perform “a range of market integrity, risk monitoring and other supervisory functions,” according to the official statement.
The statement also notes that its request for comment seeks input on 70 questions about “the reporting of primary economic terms, confirmation and continuation data; the manner in which the reporting rules address different transaction types, business models and data flows present in swaps markets; the reporting of cleared swaps; and data harmonization.”
The comment period will be open for 60 days from the date of the RFC’s publication in the Federal Register. Comments, identified by RIN 3038-AE12, may be submitted by any of the four following methods:
- CFTC website: Via Comments Online, at http://comments.cftc.gov
- Mail, hand delivery or courier: Melissa D. Jurgens, Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581
- The federal eRulemaking Portal: http://www.regulations.gov
The CFTC’s newly formed Interdivisional Working Group will review all comments and make its recommendations by the end of July.
Aite: Fragmentation, Consolidation Coming for CCPs
Fragmentation and eventual consolidation for central clearing counterparties (CCPs) is now “ever more likely,” according to “OTC Derivatives Clearing in 2014: Pump Up the Volume,” the most recent research report from market research firm Aite Group.
The process of fragmentation followed by consolidation in the clearinghouses and CCPs that currently clear OTC derivatives transactions is “inevitable,” according to Aite.
Aite’s research method was to gather Q1 2014 information from the clearinghouses and CCPs currently clearing OTC derivatives transactions, as well as from those that have announced plans to do so in the next two or three years.
“Clearers provided clearing volume data for the last two years, where available, and detailed their roadmaps to add further capabilities in the near term. Outreach included CCPs from key regions — North America, Europe, the Asia-Pacific, the Middle East, Africa, and Latin America,” Aite explains.
“The current global playing field with a limited number of CCP participants will not remain for long, given the number of domestic and regional players planning to establish and operate their own OTC derivatives clearing operations globally,” Aite predicts. “These new CCPs will put Latin America, Africa, and Australia on the map for OTC derivatives clearing — at least in the short term. The long-term future of incumbent and new CCPs, however, will be determined by their ability to grab sufficient market share to warrant continued operation.
“We forecast that incumbents are unlikely to disappear, and CCPs offering multi-asset clearing will dominate,” says Will Woodward, a research associate in institutional securities and investments at Aite, in a statement.
RIMES Forums: Buy-Side Needs Strong Data Governance
A summary recap of 32 buy-side roundtables, held in 2013 at various global financial centers and attended by 353 industry professionals representing over 150 firms, finds that “as the universal need for strong data governance increases, data management struggles continue for many firms,” according to RIMES, a provider of managed data services for the buy-side, which hosted the forums.
The RIMES Forums are intended to “develop best practice methods for buy-side firms regarding the management of index and benchmark data,” the company says. Among the issues raised by the 2013 forums:
- Frustration with an inability to address challenges related to data quality and the potential reputational risks involved as data volumes increase;
- Emerging regulations representing new and significant data management issues, with some firms unable to adapt quickly;
- Meanwhile, pursuit of investment returns and continuing product diversification is generating demand for additional data that must be sourced, managed, stored and distributed;
- Another difficult issue for the buy-side: Complex investment strategies that require an increasing number of benchmarks, which put investment managers under “unprecedented pressure.”
RIMES officials suggest firms should focus more on data governance, to achieve more efficient management of cost objectives, better compliance with vendor license agreements, and increased compliance with current and evolving regulatory requirements.
eFront’s FrontInvest 9 Offers FATCA Module
A software vendor for managing alternative investments, eFront has upgraded FrontInvest 9 with a new compliance module for the Foreign Account Tax Compliance Act and the European Union’s Alternative Investment Fund Managers Directive, according to the company.
Other features of the latest release of its flagship product for managing alternative-investments funds, investors and portfolios offers improvements in managing real estate investments, easier handling of financial reports from portfolio companies and improved reporting, the company says. In addition, the FrontInvest platform now supports the latest version of Microsoft Office.
Orangefield Columbus Targets Emerging Managers
Global fund administrator Orangefield Columbus is targeting emerging managers with its scalable platform for start-up funds, officials say.
“It’s a difficult environment for emerging managers, and it’s our job to give them their best chance at success,” Joe Holman, Orangefield Columbus CEO, says in a statement.
Orangefield provides multi-jurisdictional support and insight into global markets, including a local perspective through its presence in all major international financial centers, officials say. The company provides services to hedge funds, private equity funds, real estate funds, offshore mutual funds, family offices, fund of funds and hybrids.
Orangefield Group was formed following the 2007 ING Trust management buyout. In 2012, Orangefield Group acquired Columbus Avenue Consulting, creating Orangefield Columbus.
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