Securities Law Daily provides daily coverage of developments in the regulation of federal, state, and international securities and futures trading, with objective coverage of the...
By Richard Hill
Aug. 18 — Deutsche Bank AG's swap dealer unit failed to report required data for five days earlier this year and continues to report incomplete and late information, violating a CFTC order, the agency said ( CFTC v. Deutsche Bank AG, S.D.N.Y., No. 1-16-cv-06544, 8/18/16 ).
The reporting issues are affecting swaps market data offered to the public as well as the CFTC's ability to monitor the multi-trillion dollar marketplace, the Commodity Futures Trading Commission said Aug. 18.
The bank, a provisionally registered swap dealer for nearly four years, experienced a system outage in April that prevented it from reporting the data, the CFTC said in a complaint in the U.S. District Court for the Southern District of New York. The outage occurred in part because the company didn't have an adequate business continuity and disaster recovery plan, the agency said.
The outage “exacerbated existing problems” and led to the discovery and creation of new problems, the CFTC said. Several of the problems continue to exist, affecting particularly the reporting of foreign exchange swaps data, the commission said.
During the outage, Deutsche Bank switched from its regular data reporting platform to a backup platform in a planned effort to update the main system. The backup “disaster recovery platform” contained corrupted files, however, making it unusable. When the bank switched back to the main platform, some of the corrupted files were transferred, according to the CFTC, shutting down the entire system and causing the reporting blackout. Subsequent updates to the reporting system have caused additional reporting delays, the CFTC said.
In September 2015, Deutsche Bank agreed to pay a $2.5 million fine to settle CFTC allegations it failed to properly report swaps transactions for approximately two-and-a-half years, causing misinformation to be relayed to the marketplace in real time (190 SLD, 10/1/15). As part of the settlement, the bank agreed to improve its internal controls to ensure the accuracy and integrity of its swaps data reporting and to cease reporting violations.
The CFTC is seeking a fine, to compel compliance with the September order and to immediately appoint a monitor for the bank, which Deutsche Bank has agreed to, according to the agency. Deutsche Bank's attorney Kenneth Raisler, Sullivan & Cromwell, New York, declined to comment when reached by telephone.
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The complaint can be seen at http://www.bloomberglaw.com/public/document/US_Commodity_Futures_Trading_Commission_v_Deutsche_Bank_AG_Docket.
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