On 27 and 28 September 2021 the Commodity Futures Trading Commission (“CFTC”) entered into settlements with each of Refinitiv US SEF LLC (“Refinitiv”) and Respondent Symphony Communication Services, LLC (“Symphony”) for two disparate violations of regulations applicable to swap execution facilities.
Refinitiv, although properly registered as a swap execution facility, failed to report swap creation data for “hundreds of thousands of trades” between February 2016 and August 2020. Among the data fields that Refinitiv didn’t report were financial entity status and U.S. person status, and whether or not swaps were collateralized. The CFTC mentioned that Refinitiv’s swap data repository had listed fields required by 17 CFR Part 45 as “optional”, and described several instances where Refinitiv staff had reason to read yet hadn’t read the underlying regulation. Despite self-reporting and cooperating, these registered swap execution facility reporting violations by Refinitiv led to a $650,000 fine under this order.
Symphony, in contrast, ran a platform that permitted subscribers to trade swaps by accepting bids and offers in interest rate and cross currency swaps from other subscribers. Symphony never registered as a swap execution facility or designated contract market, nor reported any data. For almost two years Symphony marketed its automated request for quote tool and licensed it. Noting that Symphony cooperated with the CFTC’s staff during their inquiry, and shut its swap execution facility functionality down quickly, Symphony’s fine was only $100,000. It appears that Symphony intended to provide a technological solution to make requesting quotes easier, and didn’t realize that by permitting subscribers to execute on those quotes using Symphony’s technological system, Symphony was in effect providing a swap exchange facility or designated contract market.
For more details about these CFTC enforcement actions, visit https://www.cftc.gov/LawRegulation/EnforcementActions/index.htm