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The risk of not having a compliance verification system can have serious financial and reputational consequences
By:
Anantha Padmanabhan
May 5, 2021
CFTC has penalized many firms millions of dollars, making it clear that non-compliance has very serious financial penalties and long-term reputational damage.

The 2008 global financial crisis prompted policy makers in G-20 countries to commit to enhancing their regulatory oversight of financial markets, particularly for the OTC derivatives markets, with the intent to reduce risk, increase transparency, and ensure market integrity.

Although firms have been reporting to CFTC, inadequate systems and processes make it impossible for them to confirm that reported transactions are fully compliant. Recently, CFTC has acted decisively when it has found shortcomings in reported data, penalizing many firms millions of dollars, making it clear that non-compliance has very serious financial penalties and long-term reputational damage.

CFTC Requirements

The CFTC rules apply to all asset classes including credit, FX, rates, and commodities and require all Swap Dealers and Major Swap Participants to report their transactions, including all transactions on behalf of their counterparty, as soon “technologically practical” with the following requirements:

CFTC reporting rules

EZOPS’ Regulatory Dashboard manages and verifies compliance

Financial institutions receive a file from DTCC on T+1 (for trades reported on T) that includes the Event Execution timestamp and the Reporting Acknowledgement timestamp, which they use to calculate trade-level SLA.

Trade level SLA = Reporting Acknowledgement timestamp – Event Execution timestamp

EZOPS’ intuitive and data rich compliance dashboard allows firms to proactively view transactions that require amendments to comply accurately with CFTC’s time sensitive reporting mandate. Per the mandate, the EZOPS Dashboard neatly categorizes level of compliance across all reportable asset classes.

Regulatory compliance range

EZOPS’ CFTC Dashboard generates daily SLA metrics across all the required timeframes as well as an even-stricter 7-minute timeframe to help firms track and manage their CFTC compliance. It also tracks week-to-date, month-to-day, and year-to-date KPIs to help provide insight across extended periods of time and enables users to drill down into each infographic to determine which specific trades, asset classes or counterparties are problematic.

EZOPS ARO dashboard

For more information on EZOPS’ CFTC Dashboard contact sales@ezops.com