Three of America’s biggest banks are getting hit by the Commodity Futures Trading Commission (CFTC) for failing to properly report millions of transactions in the swaps market. 

JPMorgan Chase, Bank of America, and Goldman Sachs have been ordered to pay $15 million, $8 million and $30 million in fines, respectively. According to the CFTC, Goldman Sachs was fined for “unprecedented failures” regarding swap data reporting and disclosures of Pre-Trade Mid-Market Marks (PTMMMs). 

The CFTC requires swap dealers like Goldman Sachs to provide PTMMMs to allow counterparties to make informed decisions in regards to entering the swap. The rule stems from the Dodd-Frank Act of 2010. Since the rule went into effect over 13 years ago, the CFTC says Goldman has violated the regulation over one million times. 

“While Goldman has backreported more than 20 million swaps to date, the CFTC believes this figure significantly underestimates the true scope of the swap data reporting failures at Goldman. In addition, the order states, on more than one million occasions since 2013, Goldman provided counterparties with PTMMMs that were inaccurate or failed to provide a PTMMM entirely.” 

The CFTC says that JPMorgan failed to report data relevant to foreign exchange (FX) swaps. According to the press release, the bank didn’t report more than 150,000 constituent FX spot transactions, and also incorrectly classified certain transactions, effectively leaving them unreported. 

As for Bank of America, the CFTC says the group failed to report or correctly report almost four million swap transactions to data repositories. “These reporting failures were caused by 25 types of errors that principally involved swap allocations which are (normally) post-trade events where an agent allocates a portion of an executed swap to clients who are the actual counterparties to the original transaction. 

The order also finds [Bank of America] did not provide adequate supervision from approximately 2015 to ensure they complied, timely, with their swap dealer data activity and reporting obligations pursuant to the CEA and CFTC regulations.” Bank of America and JPMorgan admitted to the allegations as part of their swaps settlements, but Goldman Sachs did not.

Source : The Daily Hodl by Alex Richardson / October 09, 2023