Refinitiv SEF fined US$650,000 by CFTC for swap reporting failures
29 September 2021 US
Image: AdobeStock/ Igor Serazetdinov
The Commodity Futures Trading Commission (CFTC) has fined Refinitiv US SEF US$650,000 for data reporting failures associated with swap transactions.
The US derivatives market regulator found that Refinitiv, a registered swap execution facility (SEF), had failed repeatedly to report primary economic terms for at least 320,000 swap transactions between February 2016 and August 2020.
This represented a breach of provisions under the Commodity Exchange Act and CFTC Regulation 45.3.
According to the CFTC order, Refinitiv failed to report data elements required under the above regulation for hundreds of thousands of transactions. These data elements included primary economic terms required under Part 45 of the CFTC Regulation, specifically financial entity status and the US person indicator for each counterparty.
The error, CFTC finds, arose because Refinitiv designed its reporting systems to meet the requirements of its Swap Data Repository — which identified certain fields required by Part 45 of the CFTC Regulations as optional — rather than explicitly to meet Part 45 requirements.
“On multiple occasions, Refinitiv knew, or had reason to suspect, that it was not complying with Part 45 reporting requirements, but failed to detect and remedy its non-compliance,” said the CFTC order.
In its 2013 annual chief compliance office report, Refinitiv identified that it had also failed to report data associated with another primary economic term under Part 45, specifically whether (and to what extent) swaps were collateralised. In this document, the company indicated that it had “reason to suspect” that its reporting systems were also failing to report other required swap data elements.
Refinitiv subsequently conducted a compliance review of its reporting systems, which was finalised 10 months later, but this failed to identify the company’s ongoing reporting failures.
Rather, Refinitiv only took steps to address these failures when they were brought to its attention by two of its clients.
These violations continued until August 2020, when the company self-reported the failures to the CFTC.
The order takes into account Refinitiv’s self-reporting, co-operation and remedial action in applying a substantially reduced civil monetary penalty.
The Refinitiv SEF was launched in 2013 and received permanent approval from the CFTC in January 2016. Refinitiv is owned by London Stock Exchange Group.
This CFTC action follows on the heels of a US$1 million penalty applied to Citibank N.A. and Citigroup Global Markets Ltd for swap data reporting violations and associated supervisory failures.
This action related to the failure of two provisionally registered swap dealers at Citi to comply with swap dealer requirements for reporting legal entity identifier information to a swap data repository.
The US derivatives market regulator found that Refinitiv, a registered swap execution facility (SEF), had failed repeatedly to report primary economic terms for at least 320,000 swap transactions between February 2016 and August 2020.
This represented a breach of provisions under the Commodity Exchange Act and CFTC Regulation 45.3.
According to the CFTC order, Refinitiv failed to report data elements required under the above regulation for hundreds of thousands of transactions. These data elements included primary economic terms required under Part 45 of the CFTC Regulation, specifically financial entity status and the US person indicator for each counterparty.
The error, CFTC finds, arose because Refinitiv designed its reporting systems to meet the requirements of its Swap Data Repository — which identified certain fields required by Part 45 of the CFTC Regulations as optional — rather than explicitly to meet Part 45 requirements.
“On multiple occasions, Refinitiv knew, or had reason to suspect, that it was not complying with Part 45 reporting requirements, but failed to detect and remedy its non-compliance,” said the CFTC order.
In its 2013 annual chief compliance office report, Refinitiv identified that it had also failed to report data associated with another primary economic term under Part 45, specifically whether (and to what extent) swaps were collateralised. In this document, the company indicated that it had “reason to suspect” that its reporting systems were also failing to report other required swap data elements.
Refinitiv subsequently conducted a compliance review of its reporting systems, which was finalised 10 months later, but this failed to identify the company’s ongoing reporting failures.
Rather, Refinitiv only took steps to address these failures when they were brought to its attention by two of its clients.
These violations continued until August 2020, when the company self-reported the failures to the CFTC.
The order takes into account Refinitiv’s self-reporting, co-operation and remedial action in applying a substantially reduced civil monetary penalty.
The Refinitiv SEF was launched in 2013 and received permanent approval from the CFTC in January 2016. Refinitiv is owned by London Stock Exchange Group.
This CFTC action follows on the heels of a US$1 million penalty applied to Citibank N.A. and Citigroup Global Markets Ltd for swap data reporting violations and associated supervisory failures.
This action related to the failure of two provisionally registered swap dealers at Citi to comply with swap dealer requirements for reporting legal entity identifier information to a swap data repository.
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