Risk & Compliance

A Window Into the Swaps Market

The SEC approves rules that require security-based swap trades to be reported publicly within 24 hours.
Katie Kuehner-HebertJanuary 14, 2015
A Window Into the Swaps Market

The Securities and Exchange Commission Wednesday approved rules that require swap trades to be reported to public databases within 24 hours, in regulators’ latest effort to make the market more transparent.

“Without this transparency, both regulators and market participants were ill-prepared to deal with derivatives exposure during the events that sparked the financial crisis,” SEC Chair Mary Jo White said.

The new requirements could change after the SEC studies whether there are any impacts to the cost for institutions and whether the ability to conduct large trades is hampered, Bloomberg writes. Banking companies have been advocating for reporting delays, maintaining that “immediate transparency” could spike costs as other traders could detect trading trends and front-run their orders.

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Others see it differently, including Dennis Kelleher, chief executive officer of Better Market, who said that “a 24-hour trade reporting delay is a 19th-century, horse-and-buggy standard for 21st century markets that move faster than the speed of light,” according to Bloomberg.

The Commodity Futures Trading Commission earlier adopted rules that require dealers and other investors to publicly post price, volume and other information. Most of the swaps market is regulated by the CFTC, while the SEC regulates swaps based on a single company’s bonds or loans, equities, and indexes based on nine or fewer securities.

The SEC also adopted rules for swap data repositories, which will function partly like the price feeds operated by stock exchanges that report equity trades to the public, Bloomberg says.

Source: Bloomberg

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