Clearing, Swaps Data Among CFTC Priorities as It Revisits Rules

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By Richard Hill

Improving swaps data reporting and clearinghouse oversight are CFTC priorities as the agency seeks to rectify certain “unintended consequences” of its post-crisis rulemaking, Chairman J. Christopher Giancarlo said Oct. 3.

Clearinghouses have become “supersized” through mandatory clearing of swaps and need extra attention because of the enormous amount of risk they carry, Giancarlo said at a financial services forum in Washington. Clearing may also be too closely modeled on futures trading and not enough on swaps, the chairman said.

In response to an inquiry about swaps data-reporting issues, Giancarlo said that “of all the post-crisis reforms, visibility into counterparty credit risk is probably the most important. That’s what drove the crisis—a fear that a cascading falling of banks would bring down others because of their connectedness, but a lack of visibility into what that connectedness was,” he told reporters following the George Washington University event. “Nine years after the crisis, we still don’t have that transparency.”

`Deal’s a Deal’

At the forum, Giancarlo also repeated his concerns regarding the European Commission’s proposal to change its recognition rules for clearinghouses, which he has said could undermine a hard-won clearing agreement that allows firms such as Chicago-based CME Group Inc. and London Stock Exchange Group Plc’s LCH clearing unit to continue doing trans-Atlantic business.

In 2016, the U.S. and EU finalized a pact in which they agreed to recognize each other’s oversight of clearinghouses as comparable. The deal allowed U.S. central counterparties, as clearinghouses are known, to operate in Europe without direct oversight by regulators there.

“As someone who comes from business, when you cut a deal—a deal’s a deal,” the chairman said.

Giancarlo said at the GWU gathering he is optimistic that U.S. and European regulators can reach similar equivalence agreements on swap execution rules and collateral requirements for uncleared swaps “soon.” At the same time, he said the deals may not be in place by January, when European rules that would make it more difficult for traders on one continent to access markets on another take effect.

To contact the reporter on this story: Richard Hill in Washington at

To contact the editor responsible for this story: Phyllis Diamond at

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