The Commodity Futures Trading Commission Acting Chairman Mark Wetjen and Office of Financial Research Director Richard Berner today announced a Memorandum of Understanding on the terms and conditions for the CFTC and OFR to begin a joint project to enhance the quality, types and formats of data collected from registered swap data repositories.
The memorandum establishes a process for assessing the quality of the data. The assessment will form the basis for the subsequent development of a project plan for understanding swaps and other over-the-counter derivative transactions and their impact on financial stability. The project plan will define the scope, content and intended outcomes of further collaboration between OFR and the CFTC, to advance their common goal of improving the quality and utility of data collected under the authority of the Dodd-Frank Act.
The joint project will build on the CFTC's work with the swap data repositories (SDRs) to harmonize data reporting and improve data quality, data standards and over-the-counter derivative product taxonomies.
Wetjen and Berner also announced the creation of a staff-level Interagency Data Quality and Analytics Working Group to, among other things, coordinate the structuring of this cooperative project focusing on data quality and the use of analytical tools for regulatory purposes.
The Dodd-Frank Act established the Financial Stability Oversight Council to identify, monitor and respond to risks to the stability of the U.S. financial system. The Act created the OFR to support the Council, its member agencies, and the public by improving the quality, transparency, and accessibility of financial data and information; by conducting and sponsoring research related to financial stability; and by promoting best practices in risk management.
"One of the signature achievements of Dodd-Frank is that regulators now have a picture of the size and the scope of the derivatives market for systemic risk purposes," said CFTC Acting Chairman Mark Wetjen. "Today's agreement with OFR will enhance the CFTC's ability to see and analyze the data reported to SDRs and continue a critical dialogue on how the agency, given resource constraints, can leverage OFR's expertise and resources to protect the American public."
OFR Director Richard Berner noted that the project relates to the OFR's mission of promoting financial stability.
"At the OFR, we believe that fulfilling the promise of transparency in derivatives markets is vital," Berner said. "I applaud the CFTC for its leadership and pledge the commitment of the OFR to help make the data in swap data repositories as useful as possible to regulators and market participants for monitoring financial stability and regulating the industry."