The Commodity Futures Trading Commission proposed Friday to require that over-the-counter (OTC) swaps, whether traded on registered trading platforms or bilaterally, be reported in real time to the public, except for very large trades that would be given a 15-minute reporting delay.
The proposal is one of many prompted by the Dodd-Frank financial reform statute that aim to make the OTC derivatives market more transparent, although potentially more costly to use, as Treasury & Risk reported in November.
In this case, dealers providing OTC swap hedges to corporate end users may find it more costly to lay off those exposures to other dealers, since the real-time reporting requirement will show their hands. Any additional costs could be absorbed by the dealer or more likely be passed on to corporate customers.
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The CFTC does, however, propose a 15-minute reporting delay for very large block trades, traded over a registered trading platform, and large notional swaps, which are not traded over such platforms. The minimum size to be able to take advantage of that delay will be calculated for different asset classes by swap data repositories–entities mandated by Dodd-Frank to collect all swap data–or prescribed by the CFTC.
Derivatives Rules Seen Lifting Cost of Swaps
Wall Street Journal
CFTC Proposes 15-minute Delay on Swap Block Reporting
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