The agency is
still working on deciding how quickly market participants will
have to report customised swaps.
The CFTC had
already said swaps would have to be reported to trade
repositories, but its five commissioners have now voted to seek
public comment on making that requirement "real
published rule would not require specific price information for
swaps with notional values greater than $250m. Instead, these
will be reported simply as "greater than $250m".
executed on an exchange or swap execution facility, and those
that are not required to be cleared, price and other
information would be reported by the trading facility or
repository "as soon as technologically practicable".
The proposed rule
was approved by a vote of the commissioners, with the timing
requirements adopted by three votes to two.
O’Malia and Jill Sommers both voted against it.
O’Malia said he had grave concerns about the
requirement’s "'shoot first, ask questions
He concluded: "I
am disturbed by a footnote in the rulemaking preamble that
admits that there is a lack of public information regarding how
market liquidity might be impacted by the proposed real time
However, the three
Democrat-nominated commissioners voted in favour of the rules.
Bart Chilton rejected any concerns, saying: "I am not
interested in finding ways, nor do we have the authority, to
delay, defer, modify, or in any way alter the path set by
While the speed of
required reporting had been expected to be tight, an executive
at one futures commission merchant in New York said he believed
the vast majority of the market would be "bitterly
disappointed" by the 15 minute limit for block
highlighted a recent letter to the CFTC from the International
Swaps and Derivatives Association, arguing that if the deadline
was too tight, block swap transactions would become
Isda said block
trades tended to be large orders, which could take longer than
other trades to transact. As a result, the association said,
letting the market become aware of transactions before they
were finished could allow firms to "ambush" the transacting
controversy surrounding block trades, the definition of what
constitutes a block transaction will be significant.
The CFTC said a
block trade would be any transaction that passed both the
following tests: it must be larger than 95% of other
transactions in the previous calendar year, and at least five
times the largest of the mean, median and mode of transaction
sizes for the same category of swaps in the previous calendar
A third test may
be added, subject to feedback – that no more than one
tenth of transactions in a specific category would qualify as
Meanwhile, the SEC
is designing rules for security-based swaps. It said firms
trading the instruments would have to register with a trade
repository and report transactions in real time.
However, the SEC
has yet to finalise its policy on block transactions. The
Commission said it would welcome comments on what should
constitute a block trade, and would announce reporting