The Commodity Futures Trading Commission (CFTC) needs to pare down the data points required, set threshold volumes and integrate information collection in its existing reports with those encompassed in its proposed rule creating an account ownership and control report (OCR) to be filed weekly by exchange entities handling futures and derivatives trading, according to exchange operators.
In comments pertaining to the proposed rule, IntercontinentalExchange (ICE) suggested the CFTC limit data points to only the information that is absolutely necessary to identify the ownership and control of an account, and that only carrying firms that open and carry the account to which a trade ultimately clears be required to submit the information...not the executing firms.
Focusing on the burden and cost of the proposed reporting process, CME Group in its filed comments said the costs associated with setting it up were "prohibitive," and suggests integrating new requirements into existing systems. It would cost CME between $3 million and $3.5 million in the first year implementing the proposed changes into its exchanges. And there would be additional ongoing costs as well.
CME pointed out that 15 of the data points under the new proposal duplicate information that the CFTC already collects in its Form 102, which is required of clearing firms reporting on large traders. Also, "the proposed OCR appears to require the end of the omnibus account structure within the industry." This would be a serious disruption in market liquidity and foreign market participation in U.S. markets, CME said.
CME objected to the Commission's statement that it did not intend to convene an industry working group to develop its OCR proposal, saying that without industry input the Commission's version may result in costly unintended consequences.
ICE suggests that the Commission set volume thresholds for reporting that would vary depending on the type of reporting entity and the specific contract. "Excluding the many low-volume infrequently traded (retail type) accounts based on a volume threshold would translate into significant reduction in costs to the firms and reporting entities supplying OCR data."
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