CFTC Fines Deutsche Bank for Dodd-Frank Swap Reporting Violations | Practical Law

CFTC Fines Deutsche Bank for Dodd-Frank Swap Reporting Violations | Practical Law

The CFTC issued an order settling charges against Deutsche Bank AG, a provisionally registered swap dealer, for failing to properly report its swap transactions in accordance with CFTC rules. This is the CFTC's first enforcement action involving Dodd-Frank swap data reporting requirements.

CFTC Fines Deutsche Bank for Dodd-Frank Swap Reporting Violations

Practical Law Legal Update w-000-6279 (Approx. 3 pages)

CFTC Fines Deutsche Bank for Dodd-Frank Swap Reporting Violations

by Practical Law Finance
Published on 01 Oct 2015 • USA (National/Federal)
The CFTC issued an order settling charges against Deutsche Bank AG, a provisionally registered swap dealer, for failing to properly report its swap transactions in accordance with CFTC rules. This is the CFTC's first enforcement action involving Dodd-Frank swap data reporting requirements.
On September 30, 2015, the CFTC issued an order filing and simultaneously settling charges against Deutsche Bank AG, a provisionally registered swap dealer (SD), for failing to properly report its swap transactions under Dodd-Frank swap data reporting rules and Parts 43, 44 and 45 of the CFTC’s regulations. This is the CFTC's first enforcement action involving Dodd-Frank swap data reporting requirements.
Part 43 of the CFTC's regulations specifies requirements for real-time public swap data reporting and public availability of swap transaction and pricing data. Part 45 specifies obligations to report so-called creation and continuation data. Parts 44 and 45 also include requirements for a reporting counterparty to report and correct errors and omissions in its swaps reporting, including cancellations, to the registered swap data repository (SDR) to which the reporting counterparty originally reported the swap.
According to the order, misinformation was disseminated in the market through the real-time public tape and to the CFTC as a result of the following reporting failures of Deutsche Bank:
  • Failure to properly report cancellations of swap transactions in all asset classes, which in the aggregate included between tens of thousands and hundreds of thousands of reporting violations and errors and omissions in its swap reporting.
  • Failure to provide timely notice to its SDR, despite being aware of problems relating to its cancellation messages since its reporting obligations began on December 31, 2012. Deutsche Bank did not diligently investigate, address and remediate the problems until it was notified of the Division of Enforcement's investigation in June 2014.
Under the order, Deutsche Bank is required to:
  • Pay a $2.5 million civil monetary penalty.
  • Comply with undertakings to improve its internal controls to ensure the accuracy and integrity of its swaps reporting.
This case signifies the CFTC's increased emphasis on enforcement of reporting requirements. According to ISDA, there are more cases in the pipeline, and the penalties are expected to increase.
This action also demonstrates that the CFTC will impose higher penalties where a market participant fails to adequately respond to communications from the CFTC seeking information about its activities.
For more details on the CFTC swap data reporting requirements, see Practice Notes, US Derivatives Regulation: CFTC Swap Data Reporting and Recordkeeping and The Dodd-Frank Act: Practical Guide to Over-the-Counter (OTC) Swap Data Reporting.