New swaps data reporting rules have left the Commodity Futures Trading Commission (CFTC) floundering in a sea of data, its computers crashing under the strain, claims one of the watchdog's own commissioners.
Under Dodd-Frank, the CFTC recently introduced rules meaning that traders now have to report all OTC trades to Swap Data Repositorys (SDRs) run by third parties such as the DTCC.
However, in a speech, Republican CFTC commissioner Scott O'Malia, claims that his agency bungled the plans, failing to specify the data format reporting parties must use when sending their swaps to SDRs.
"In other words, the Commission told the industry what information to report, but didn't specify which language to use. This has become a serious problem," he told an audience at a Sifma seminar.
The multitude of languages is only half the problem, says O'Malia, revealing that the CFTC's IT systems are failing to cope with the new data it is receiving on thousands of swaps each day.
The commissioner claims that "none of our computer programs load this data without crashing. This would seem odd with such a seemingly small number of trades. The problem is that for each swap, the reporting rules require over one thousand data fields of information."
The problem is so bad that the watchdog cannot even find JPMorgan's massive $6.2 billion 'London whale' loss on credit default swap trades in its data files.
O'Malia warns that until his organisation starts receiving more uniform file transfers and beefs up its IT so this data can be analysed, the new rules will do nothing to help improve market surveillance.