Why is CFTC enforcement increasing for swap dealers and swap reporting?

CFTC leadership has signalled a stronger focus on persistent swap reporting failures and expects swap dealers to prioritise compliance with reporting obligations. Recent enforcement outcomes indicate that ongoing deficiencies in accuracy, timeliness, and controls can trigger escalated regulatory action.

What are the financial risks of failing to comply with CFTC swap transaction reporting rules?

Financial exposure can be significant. The CFTC reported FY 2023 enforcement outcomes exceeding $4.3 billion in penalties, restitution, and disgorgement, and specific swap reporting cases have resulted in large civil monetary penalties, including a combined $50 million across multiple firms in September 2023.

Beyond fines, what other costs can enforcement actions create?

In addition to penalties, enforcement can drive expensive remediation, including independent reviews and external audits. These programmes can exceed $1 million when combining internal resources with external subject matter experts, depending on scope and complexity.

What CFTC reporting issues commonly lead to findings or scrutiny?

Common issues include late reporting, unresolved breaks, data quality deficiencies, inaccurate product classifications, identifier and reference data problems, incorrect price notation, and failures to identify and manage open positions and lifecycle updates.

Can technology reduce the cost and operational burden of CFTC reporting and controls?

Yes. Automated pre-submission validation, reconciliation, and exception workflows can reduce manual effort and improve control. Qomply reports that some firms have achieved substantial reductions in operational cost and time spent on manual processes by using quality assurance and reconciliation technology.

What solutions are available for firms struggling with CFTC data quality, reconciliation, and Part 45 obligations?

Firms can use dedicated data quality and reconciliation solutions designed for swap reporting governance. Qomply provides a CFTC-focused suite intended to help firms strengthen accuracy and timeliness controls, reconcile reporting outputs, identify discrepancies (including open positions), and improve audit readiness.

Qomply Launches CFTC Transaction Reporting & Reconciliation Solutions in the US

Qomply's entry into the US market coincides with recent enforcement activity by the US CFTC regulator. The fines handed down sent a clear message to firms dealing in Over-the-Counter derivatives to either prioritise accurate reports and identify open positions or face severe penalties.

“It now has been 13 years since Dodd-Frank and well past time for swap dealers to ensure they are in full compliance with the CEA and CFTC regulations,” said CFTC Division of Enforcement Director Ian McGinley. “As significant reporting failures continue to persist, our resolutions will reflect the gravity of swap dealers’ continuing failures to prioritize compliance and seek to deter future failures. “

McGinley's comments follow the September 2023 CFTC's imposement of fines totalling $50 Million across three major financial investment firms for failures related to the accuracy and timeliness of transaction reports required by CFTC regulations. Identifying Open Positions, correcting breaks, resolving data quality issues and reporting late were all noted as contributory factors to the punitive enforcement.

Headquartered in London, UK, Qomply has been helping clients comply with the complex transaction reporting rules since 2019. Managing Director at Qomply, Michelle Zak observes: “Qomply’s entry into the US is timely as CFTC transaction reporting faces increased scrutiny. Data quality is one part of accurate reports. Detecting Open Positions, identifying static data and reference data issues, misrepresenting product classifications and reporting incorrect price notations are amongst the violations noted by the CFTC. These are all areas that would have been easily detected by Qomply.”

“Many firms compute the cost of transaction reporting as an operational cost that can be broken down into a price per transaction. However, enforcement action can dwarf the everyday costs of producing reports. Regulators have the authority to force a firm to undertake an external audit that can incur fees upwards of $1 million when incorporating internal resources as well as external subject matter experts.”

The CFTC notes: “In FY 2023, the CFTC’s Division of Enforcement (DOE) filed 96 enforcement actions charging fraud, manipulation, and other significant violations in diverse markets, including digital assets and swaps markets, resulting in over $4.3 billion in penalties, restitution and disgorgement.”

Qomply has received success in the UK and is highly-regarded for the comprehensiveness of their transaction reporting services. Many clients have experienced significant results, including over an 80% reduction in costs and more than a 65% reduction in time spent on manual processes. Qomply is well-positioned to replicate this success in the US.

About Qomply

Qomply removes costly transaction reporting fees, increases operational efficiency, and empowers firms to take control of the quality of their transaction reporting.

Our award-winning ReportAssure platform, powered by our proprietary assurance engine, delivers one of the most comprehensive arsenals of accuracy checks in the industry, ensuring our customers’ transaction reports are as complete and accurate as possible.

By offering modular subscriptions, we enable financial firms to benefit from high-quality, regulatory reporting technology, choosing from a menu to suit all appetites.

For more information, please contact Qomply, on +44 (0) 20 8242 4789 or info@qomply.co.uk

Follow Qomply on social media on Twitter (https://twitter.com/QomplyRegTools) and LinkedIn (https://www.linkedin.com/company/qomply/)

Qomply launches CFTC transaction reporting solutions in the United States

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Qomply Launches CFTC Transaction Reporting & Reconciliation Solutions in the US

Expansion into US Coincides with Recent Enforcement Activity

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