Along with a number of financial regulatory agencies, the Commodity Futures Trading Commission (CFTC) has approved a rule proposal to establish technical data reporting standards. However, concerns have been raised as to the costs of new regulation, by one of the CFTC commissioners.
The standards would allow for the interoperability of financial regulatory data across agencies, the commission stated, outlining common identifiers for legal entities and financial instruments and other data.
If accepted, the rule would see the standardisation of data reported to the CFTC, Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Consumer Financial Protection Bureau, Federal Housing Finance Agency, Securities and Exchange Commission (SEC), and the Department of the Treasury.
In turn, data collected from these bodies on behalf of the Financial Stability Oversight Council would also be normalised.
CFTC commissioner Caroline Pham voiced her support for the mandate, but added: “I believe the Joint Data Standards Proposal would be improved by addressing head-on the elephant in the room—the very real costs that will be imposed on potentially tens of thousands of firms of all sizes that will eventually have to update their systems and records to adhere to the new data standards. I encourage all commenters to address the costs and benefits of the Joint Data Standards Proposal, including the necessary future agency rulemakings that will subsequently follow.”
The proposal continues the implementation of the Financial Data Transparency Act of 2022 (FDTA), elements of which have recently been criticised by the Securities Industry and Financial Markets Association. In a recent blog post, former chief economist and director of the Division of Economic and Risk Analysis (DERA) at the SEC Craig Lewis argued that the SEC’s best execution proposal was built on “fundamentally flawed“ economic analysis.
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