CFTC charges Deutsche Bank AG with multiple swap reporting violations and more

It’s been a busy week for the U.S. Commodity Futures Trading Commission (CFTC).

After charging FXCM, CFTC has filed a civil complaint in the U.S. District Court for the Southern District of New York, charging Deutsche Bank AG (Deutsche Bank) with failing to report any swap data for multiple asset classes for five days; submitting incomplete and untimely swap data; failing to supervise its employees responsible for swap data reporting; having an inadequate Business Continuity and Disaster Recovery Plan; and violating a prior CFTC Order.

As alleged in the CFTC’s Complaint, on April 16, 2016, Deutsche Bank’s swap data reporting system experienced a Systems Outage that prevented Deutsche Bank from reporting any swap data for multiple asset classes for approximately five days. Deutsche Bank’s subsequent efforts to end the System Outage repeatedly exacerbated existing reporting problems and often led to the discovery or creation of new reporting problems, many of which violate a CFTC Order entered in September 2015.

The complaint alleges that Deutsche Bank’s swap data reported before and after the System Outage revealed persistent problems with the integrity of certain data fields, including numerous invalid legal entity identifiers (LEIs). The Complaint further alleges that a number of these reporting problems persist today, affecting market data that is made available to the public, as well as data that is used by the CFTC to evaluate systemic risk throughout the swaps markets. The Complaint also alleges that the System Outage and the subsequent reporting problems transpired at least in part because Deutsche Bank failed to have an adequate Business Continuity and Disaster Recovery Plan and other appropriate supervisory systems in place.

The CFTC and Deutsche Bank filed a joint motion seeking the appointment of a monitor to ensure Deutsche Bank’s compliance with its reporting responsibilities under the Commodity Exchange Act and CFTC Regulations. Specifically, the monitor will assess and make recommendations regarding Deutsche Bank’s swap data reporting activities, including, but not limited to, its policies, procedures, infrastructure, and systems. In addition, the CFTC seeks the imposition of a civil monetary penalty and a permanent injunction.

Aitan Goelman, CFTC

Aitan Goelman, CFTC

CFTC Director of Enforcement Aitan Goelman commented:

Deutsche Bank’s repeated violations warrant the intervention of a Court-appointed monitor. Deutsche Bank has shown over the last year its inability to comply with its swap reporting responsibilities under the Commodity Exchange Act and CFTC Regulations. The CFTC treats these failures seriously and will take appropriate steps to ensure compliance.”

The CFTC recognizes Deutsche Bank’s cooperation.

The CFTC’s Data and Reporting Branch in the Division of Market Oversight (DMO) is responsible for the supervision of swap data collection and reporting obligations of registered entities.

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