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May 29, 2020

The CFTC’s Proposed 48-Hour Delay for Block Trades Would Shut Off the Lights in the Swaps Markets

Friday, May 29, 2020

Contact: Pamela Russell at 202-618-6433 or

Washington, D.C.  –  Joseph R. Cisewski, Senior Derivatives Consultant and Special Counsel for Better Markets, issued the following statement with respect to the Commodity Futures Trading Commission’s (CFTC) proposed public swaps reporting and related regulations:
“In 2013, the CFTC implemented the Dodd-Frank Act to introduce post-trade transparency to the swaps markets. That cornerstone financial reform eased the impenetrability of the dealer-dominated derivatives market structure, which essentially left counterparties, regulators, and the public in the dark with respect to risks and prices. That darkness, in turn, exacerbated panic and risk aversion during the 2008 financial crisis, precluded a transition to competitive markets, and facilitated derivatives valuation, risk management, and trading practices that endangered the U.S. economy. 
“The CFTC’s public reporting framework shined a light on these dark markets. That transparency has supported responsible risk management by ensuring positions can be marked by reference to public data. That transparency also has enabled and reinforced other financial reforms, which have demonstrably benefited end-users, including through better pricing and greater liquidity. 
“The CFTC nevertheless proposes to shut the lights off in the swaps markets. Specifically, it proposes to permit block transactions (large swaps transactions) to be publicly reported as late as 48 hours after execution. This proposed change represents more than a 19,000 percent increase in current delays for categories of swaps, which must be reported within 15 minutes.  
“As Better Markets explains in our comment letter and our one-page fact sheet, the 48-hour block trade reporting delay would severely damage improvements to liquidity, risk management, market integrity, and fair competition. It would also provide unfair trading and informational advantages primarily to just four U.S. bank holding companies that already facilitate trading in more than 87 percent of the $201 trillion notional U.S. swaps markets. In this sense, the CFTC’s injudicious and anti-market policy would not only shut off the lights but also provide derivatives dealers flashlights that no one else can use.
“To be sure, the CFTC proposes to narrow the transactions qualifying for delayed public reporting, which would likely increase pre- and post-trade transparency for an unknown number of swaps. But that speculative benefit hardly outweighs its definite drawbacks. Markets work better with the lights on. The CFTC’s proposal to reduce post-trade transparency so dramatically and so hastily flips the light switch for far too much of the market, with far too little thought.”
Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit  
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