When Bear Stearns Cos. was collapsing in early 2008, U.S.officials struggling to contain the damage feared fallout from thebank's derivatives trades could devastate already roiling markets.But they couldn't tell how bad things could get, or who would behit the hardest, because at the time banks didn't have to reportthe details of their swaps transactions.

Nearly a decade later, the regulator in charge of overseeing the$483 trillion global swaps market says it still often initiallygets only a murky view of those transactions. That's in partbecause the rules devised to solve the problem have created apatchwork system where data is collected under different formatsand standards. As soon as this week, Commodity Futures TradingCommission acting chairman J. Christopher Giancarlo aims to changethat by announcing an effort to rewrite the rules to make the datamore usable.

The way it works now, four privately owned data repositories,approved by the government, collect and report data on the swapsmarket. In the absence of thorough guidelines, they are allowed touse different standards that leave it to CFTC workers to cobbletogether a full picture of systemic risk. The goal of the agency'snew effort will be to standardize the data.

“It's just not as easy or efficient as it should be,” said AmirZaidi, who heads the agency's market oversight unit and will leadthe overhaul effort. “If we had all the stuff automated, ratherthan manually cleansing the data, it would obviously be much moreefficient.”

The swap data repositories were created as part of theDodd-Frank Act of 2010, which vastly broadened the CFTC's oversightresponsibilities. The agency wrote the rules, but didn't givestrong guidance to the four firms authorized to operate datawarehouses or require that they coordinate how they formatinformation.

“There's no single place to go to get the data,” said LarryTabb, the founder of the Tabb Group, a capital markets-focusedresearch firm. “If they had a crisis and a weekend to figure itout, this would be problematic. It would be very hard to figure outwhere all the counter-party risk would be.”

The CFTC's inspector general recently blasted the agency, notthe companies, for the way it has handled the collection of swapsdata, calling it “inexplicable that a regulatory agency wouldimpose data-reporting obligations on industry but fail tocoordinate with industry to establish the data and formats neededto facilitate the regulatory program.”

When he was acting chairman in 2014, Mark Wetjen sought commenton ways to change how information is reported to the databases.More recently, Giancarlo's predecessor Timothy Massad formed aworking group to address the concerns, according to a personfamiliar with the matter. In June 2016, the agency amended rules totry to clarify reporting responsibilities for cleared swaps.

'Remarkably Elusive'

“It's just proven to be remarkably elusive to get thestandardization and the consistency because different entities havedifferent requirements,” said Dan Berkovitz, a former CFTC generalcounsel who's now a partner at law firm WilmerHale. “If it's easyit would have been done. I don't think it hasn't been done for alack of will or a lack of trying.”

The Depository Trust & Clearing Corp., CME Group Inc.,Intercontinental Exchange Inc., and BSDR, which is owned byBloomberg News parent company Bloomberg LP, each run a depositoryregistered with the CFTC.

Wetjen, who is now DTCC's head of global public policy, said ina statement that regulators' effort to give more prescriptiveguidance “should encourage the harmonization and standardization ofdata across trade repositories.” In an email, CME said it isparticipating in standardization initiatives and was “pleased” tosee them progressing. ICE declined to comment on the CFTC's plansand said that its repository only accepts submissions when all datafields are complete. BSDR, the Bloomberg-owned entity, declined tocomment.

In preliminary discussions, the companies have appeared willingto go along with the program, Zaidi said. Giancarlo, a formertrading firm executive, has been well-received by the industry,something that could bolster his bid to finally get everyone on thesame page.

“It's been three years” Zaidi said of the effort to standardizethe data. “We don't want it to take another 10.”

Senate Confirmation

Giancarlo, a Republican who's still awaiting Senate confirmationfor a full term as CFTC chairman, has said that he plans to waituntil commissioner openings are filled before moving ahead withmajor rulemakings. Currently, Sharon Bowen, a Democrat who has saidshe plans to leave the agency in the coming months, is the onlyother member. At full strength, the CFTC has five commissionersincluding the chairman.

The planned rules overhaul will be broken into two phases.First, CFTC officials will focus on working with the companies thatrun the repositories to validate information and ensure all partiesare reporting accurately. That would be followed by moves to createa rule spelling out the data that repositories need to makeavailable, he said. Those requirements would be meant to matchinternational standards now being developed, and regulators areaiming to complete both rules for the end of 2018.

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