FIA sent a letter to the CFTC requesting a modification and extension of the current no-action relief for Ownership and Control Reports Implementation Reporting Requirements. The full letter is available in Resources on the right, and the text follows.
Re: Ownership and Control Reports Implementation: Request Pursuant to Commission Regulation 140.99 to Extend and Modify Existing No-Action Relief for Reporting Requirements Under Parts 17, 18, and 20 of the Commission’s Regulations
Dear Mr. McGonagle:
The Futures Industry Association (“FIA”) is a leading trade organization for the futures, options, and over-the-counter (“OTC”) cleared derivatives markets. Its members are active users of the commodity futures markets and include derivatives clearing firms of all sizes, as well as leading derivatives exchanges and large commodity firms. Many FIA members are reporting entities that are directly impacted by the U.S. Commodity Futures Trading Commission’s (“CFTC” or the “Commission”) Ownership and Control Reports (“OCR”) Final Rule.[1] For the reasons explained below, reporting entities are concerned that they will not be ready to comply with the September 30, 2015 implementation date specified in the current OCR no-action relief (“Current Relief”).[2]
FIA has gathered statistics during the testing process that show that of the reporting entities that use FIA Technology Services Inc., only approximately 50% of the reportable accounts expected to be reportable on September 30 have the full amount of data required to be compliant. Although the FIA Tech system represents a significant number of reporting entities, it is only part of the total universe of reportable accounts. We understand, however, that the Commission statistics, which represent all potentially reportable accounts, show similar results. As a result, FIA requests that Staff extend and modify the Current Relief to ensure a smooth transition to the OCR Rule and increase the reliability and consistency of the OCR data provided to the CFTC.
FIA and its members have worked diligently to come into compliance with the OCR Rule. Efforts undertaken to date include:
- Participating in bi-weekly Commission meetings and compiling an “Unofficial Guide” that lists questions submitted to, and the responses of, Staff during the CFTC bi-weekly calls to assist FIA members with OCR implementation efforts;
- Developing the FIA Tech portal to centralize data collection for reporting entities and streamline the implementation process for customers/counterparties of reporting entities;
- Developing internal firm software to facilitate the collection and reporting of OCR data;
- Participating in the CFTC testing program since April 2015;
- Hosting routine meetings with reporting entities;
- Hosting weekly client on-boarding calls and system user group calls to identify and discuss issues raised by clients, as well as attempt to standardize the response to certain OCR data requests;
- Engaging in a broad client outreach program to educate customers and counterparties about the OCR Rule and its enhanced reporting requirements;
- Increasing operational support to gather and verify OCR data; and
- Modifying internal practices to collect OCR data during the on-boarding process.
Notwithstanding the substantial efforts outlined above, the statistics illustrate that reporting entities will not be ready to comply fully with the OCR Rule when the Current Relief expires.
We appreciate the substantial amount of time that Commission staff has taken to discuss the Ownership and Control Reports (“OCR”) rule set with FIA staff and our members. We know that the CFTC has worked for many years to improve the rules around position reporting in order to better understand market activity. FIA is very supportive of that effort and, in particular, we strongly believe that automating the reporting of 102 data via electronic forms is a critical improvement that will significantly enhance the CFTC’s market surveillance capabilities. We strongly encourage the Commission to continue to consider the points raised in the FIA Petition for Amendment of the Ownership and Control Reports Rule and welcome the opportunity to work with Commission Staff, if relief is granted, to help the Commission meet its regulatory objectives.
Conclusion
FIA appreciates Staff’s willingness to engage with FIA to discuss implementation of the OCR Rule. Please contact the undersigned if you have any questions about the relief requested by FIA herein.
