CFTC Commissioner Calls for Tougher Swaps Reporting Sanctions

US Commodity Futures Trading Commission (CFTC) commissioner Christy Goldsmith Romero has taken aim at the level of sanctions handed down by the commission for breaches of its swaps reporting rules.

The comments come alongside a $1.5 million penalty against BGC Derivative Markets, a Swap Execution Facility (SEF) in the US for failing to report, or accurately report, over 16,000 trades across, interest rates, FX, credit and equities over a five-year period.

In a statement explaining why she “concurred” with the punishment, rather than “supported” its provisions, Goldsmith Romero says in her first six months of serving as a CFTC commissioner, she has seen multiple enforcement cases involving swap reporting failures, which is “troubling”.

“As a market regulator, we must send a strong message that systemic swap reporting failures are unacceptable,” Goldsmith Romero states. “SEFs should have a culture of compliance. I support the Commission’s enforcement action…based on [BCGD’s] systemic failure to report, or misreporting of, swap transactions, but I do not support the provisions of the settlement. I do not agree that the $1.9 million penalty combined with no admissions by BGCD in settlement is sufficient to deter future violations or provide accountability and transparency. Therefore, I vote to concur, rather than fully support.”

Noting that a higher penalty and defendant admissions to wrongdoing would serve as a stronger deterrent for BGCD and other SEFs, Goldsmith Romero argues, “This case warrants the heightened accountability and transparency that comes with requiring the defendant to admit to its wrongdoing.

“The CFTC should have required BGCD admissions because BGCD’s violations were egregious,” she continues. “BGCD had systemic reporting problems for five years [and] took more than a year to implement a reconciliation process identified by its compliance department in March 2020 that would ensure that all transactions on the SEF were being reported.

“If reporting is at the heart of the Commission’s market surveillance and enforcement programmes, we should take a hard stance when we find violations of our swap reporting rules,” Goldsmith Romero concludes.