News: Read Scott O'Malia's Take Down of Today's CME-1001 Ruling

07 March 2013 | Bill Hodgson

Scott O'Malia doesn't mince his words, he's critical in a forensic take-down of the process for defining the reporting requirements within his own organisation. He abstained from the vote regarding CME-1001, his press release explains why. The dispute between the CFTC, DTCC & the CME isn't over yet. Full text here: http://www.cftc.gov/PressRoom/SpeechesTestimony/omaliastatement030613


Can anyone summarize what is Commissioner O'Malia's basic view of how reporting should work? (Aside from criticizing the rule making process and the convoluted and inconsistent nature of the final rule). To me reporting rules seem overly complex in its industry level structural design. If this is about transparency to counterparty risk in the simplest possible approach then I would expect the regulators to care most about ability to see all of a party's exposures in all derivs instruments to all parties and CCPs in as few data repositories for each party as possible - ideally one per party. CFTC can then require SDRs to do aggregation / metrics for it rather than building that themselves.The simplest approach seems to be that reporting responsibilities should live for cleared trades with OTC CCPs which route to the SDR chosen by the participant (both clearing member and clearing client) - to enable a single point of aggregation for each participant. This would leave bilateral trades (including any clearable trades that fail to clear) as SDs' responsibility. Views please:- Is Commissioner O'Malia advocating this kind of approach? - Does anyone have a view why SEFs need to report anything (since CCPs can handle the 99.9% that do clear and SDs the 0.1% that fail to clear)?