© 2012 Promontory Financial Group, LLC. All rights reserved.

Washington, DC Atlanta Brussels Dubai Hong Kong London Milan New York Paris San Francisco Singapore Sydney Tokyo Toronto

CONFIDENTIAL

Technology Advisory Committee

Review and Assessment of Interim Recommendations of the 

Subcommittee on Data Standardization

Working Group #4: Storage and Retrieval of Financial Data

March 29, 2012
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL 2

Contents

• Background

• Review Process

• Promontory Assessments and Conclusions
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL

Background
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL 4

Background

The CFTC’s final reporting rules require market participants to submit data from various stages throughout the

existence of a swap to which they are a counterparty. The reported data is received and stored by swap data

repositories (“SDR”) that have a number of duties under 17 CFR Part 49, including accepting, validating,

maintaining, monitoring, screening and analyzing swap data.

Working Group #4 was assigned to propose methods of data standardization to aid the storage, processing

and retrieval of large amounts of data. This working group presented interim recommendations to the

Technology Advisory Committee that relate to data standardization and ways to create efficiencies for SDRs in

performing their obligations.
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL 5

Working Group #4 Members Working Group Coordinator and Government 

Representatives

Marc Donner, Google Andrei Kirilenko, CFTC

Adam Litke, Bloomberg

Jim Moran, CME Group

Background
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL 6

Background - Promontory Financial Group

 Promontory Financial Group, LLC (“Promontory”) is a financial services consulting firm headquartered in 

Washington, D.C. with 14 offices spread over four continents.

 Commissioner O’Malia requested Promontory’s assistance in vetting the interim recommendations of Working 

Group #4.

 Promontory does not have a proprietary interest in the Working Group #4 interim recommendations nor in their 

implementation. We did not approach the review of these recommendations from any one client’s perspective. 

Our clients include, or have included, the CFTC, existing DCOs and DCMs, and entities that will register as 

SDRs, swap dealers and major swap participants, as well as many institutions that are financial and commercial 

end-users of swaps. 
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL

Review Process
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL 8

Considerations

Promontory conducted the review of Working Group #4’s interim recommendations by 

assessing the recommendations against the following considerations:

 Consistency with Dodd-Frank Act Title VII statutory provisions and rulemakings and 

international standards

 Cost and ease of implementation by SDRs and reporting Swap Entities

 “Time-to-market”

 Consistency with current industry initiatives

 Actionability

The following slides identify these specific considerations where applicable to the 

assessment of the particular recommendation.
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL

Promontory Assessments and Conclusions
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL 10

Interim Recommendation: Data Format – 1a

The first step to standardize trade reporting across market sectors should be to develop a set of common XML 

elements and then work towards establishing a unified set of XML tags over time. Further, setting up a process to 

manage and evolve standards over time using the expertise of industry working groups is the best way to achieve 

success in standardization projects.

Assessment

Consistency with regulatory requirements:

• 17 CFR Part 45 does not require reporting to SDRs use a single data standard

• The CPSS/IOSCO Report on OTC Derivatives Data Reporting and Aggregation 

Requirements does not address data formats

• Any standardized data format would likely ease SDRs’ burden of complying with 

the duty to maintain, screen and analyze reported data

Cost and ease of implementation:

• The use of XML would provide the industry with a flexible and extensible

standard

• As the protocol is updated, systems that use XML will require software to be 

rewritten

• Costs will be attributed largely to development man hours

“Time-to-market”:

• This initiative will likely continue to develop concurrently with other technology 

initiatives without a predetermined deadline

Current industry initiatives:

• There has been continuing development of the FIX, FIXML and FpML protocols

• It may be a challenge to find a solution that can replace any of these protocols

Actionability:

• This initiative will require active participation and input from a large majority of 

participants in the derivatives markets

Conclusion

We agree with the direction of this recommendation. Although the

CFTC does not require the standardization of data reporting to SDRs

across all market sectors, we believe that this recommendation would 

advance the goals of standardized reporting, and facilitate the CFTC's

ability to query, analyze and compare information. 

However, we do not believe that the CFTC should mandate or

prescribe a standardized data format for reporting to SDRs; instead the

CFTC should act as a facilitator to encourage the industry to be

proactive in developing a standard. The TAC should recommend that

the CFTC consider providing support and guidance for the initiative to

develop a set of common XML elements and, subsequently, a unified

set of XML tags.
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL 11

Interim Recommendation: Data Format – 1b

The CFTC should not dictate the input format to the SDR as long as the SDR can produce output to the CFTC in a 

format that the CFTC finds acceptable.

Assessment

Consistency with regulatory requirements:

• This recommendation is consistent with 17 CFR Part 45, which (i) requires 

that an SDR transmit all swap data requested by the CFTC to the CFTC in 

an electronic file in a format acceptable to the CFTC and (ii) allows an 

SDR to permit reporting entities to use various facilities, methods, or data 

standards to report swap data

Cost and ease of implementation:

• Existing trade repositories have advised the CFTC that they are able to 

accept data in multiple formats or standards from different counterparties

“Time-to-market”:

• Minimal

Current industry initiatives:

• This recommendation will likely allow reporting entities to continue using, 

amongst others, the main existing data standards (FIXML and FpML)

Actionability:

• Complete

Conclusion

We agree with this recommendation, which, effectively, has already

been implemented in 17 CFR Part 45. Implicit in this recommendation

is that the CFTC defines acceptable data transmission output

format(s) for reporting to the CFTC and disseminate these

requirements in time for the SDRs to comply with the requirements.
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL 12

Interim Recommendation: Storage – 2a

It is likely that there will need to be a way to reformat or transfer old records into newer media from time to time. 

SDRs will need procedures to do this in a way that still maintains the integrity of the original data, while 

maintaining the readability over time. In this area, it would be helpful to have further guidance to clarify best 

practices for developing and implementing such procedures.

Assessment

Consistency with regulatory requirements:

• SDRs must store and maintain swap data for a period of at least fifteen 

years following the final termination or expiration of the swap

• SDRs have a duty to provide data to the CFTC in a timely manner

• 17 CFR Part 49 requires SDRs to establish sufficient policies and 

procedures to prevent a valid swap from being invalidated

Cost and ease of implementation:

• Implementation of this initiative will consist mainly of converting the 

original electronic file to the newer format while retaining the original data

• There may be software costs over time

• There will need to be an audit trail as data migrates through systems

“Time-to-market”:

• This will be dependent on technological innovation and can only be 

addressed reactively

Actionability:

• The TAC should look to the procedures in place in other industries that 

require the storage of data over long periods of time

Conclusion

We agree with this recommendation. Storage issues associated with

swap data that is required to be stored and maintained by the SDRs

should be addressed immediately. It would be helpful for the industry

if the CFTC issued guidance further defining "sufficient policies and

procedures" that the SDR must establish to maintain the validity of

swaps. In this regard, the TAC should recommend that the CFTC

consider the value of robust change management policies and

procedures that address periodically updating (i) storage media, (ii)

databases, and (iii) associated application systems. The CFTC

should also consider providing SDRs with further guidance on

establishing a control framework that is reasonably designed to

ensure that the data continue to be credible and usable over time.
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL 13

Interim Recommendation: Storage – 2b

The long duration of some swaps may require that original data be maintained in its native format for extended 

periods. The term "native file format" appears to need further definition, as it is unclear whether this means the 

format created by a sender of data, the format that might exist in transmission, or the format that a receiver of data 

uses to state the data. The Working Group believes that for a cleared swap trade, the "native format" of the 

transaction record is that used and maintained by the DCO. For a privately negotiated trade reported to an SDR, 

the "native format" would be that used and maintained by the SDR.

Assessment

Consistency with regulatory requirements:

• No requirement to keep reported date in a “native format”

• Need to maintain credibility of data required to be held for a long period 

Cost and ease of implementation:

• Greatest cost will be increasing storage space due to the need to retain 

the data in its original format

• Increased risk of reports or queries with identical parameters generating 

differing results as systems and software change over time

“Time-to-market”:

• Long-term

Actionability:

• Instead of maintaining data in its native format, it may be less 

burdensome and equally effective to develop appropriate controls and a 

robust audit trail to keep data credible over time

Conclusion

Although there is no statutory or regulatory requirement that an SDR

maintain reported data in a native format, it may be appropriate to

conduct a legal analysis as to whether data in its native format may be

necessary for any regulatory enforcement actions. Aside from that

concern, we think the concept of maintaining a "native file format" may

be too restrictive since the goal of maintaining the credibility of data

may be achievable by less onerous means. It may be more appropriate

for the CFTC to focus on the issues associated with storage and

information content and consider ways to ensure the accuracy and

credibility of information as it is transmitted, stored and retrieved over

time. 

The TAC should recommend that the CFTC consider providing

guidance on developing appropriate controls and audit trails to ensure

that stored data remains credible. Such controls may include verifying

the consistency of file sizes, number of records, file names, date ranges

and running a set of predetermined algorithms against the old file and

the new file and checking that the results are the same.
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL 14

Interim Recommendation: Versions – 3

Rather than allow every minor change to a product definition to result in a new and distinct product ID, keep 

product IDs stable by associating a version with product IDs. It will be important to match the product ID and the 

version, particularly when contract lifetimes are long compared to the duration of a given version.

Assessment

Consistency with regulatory requirements:

• The unique product identifier (UPI) has to satisfy the requirement of 

identifying and describing the swap asset class and sub-type within that 

asset class to which a swap belongs, and the underlying product for the 

swap, with sufficient distinctiveness and specificity

Cost and ease of implementation:

• No significant additional costs to SDRs or reporting entities are 

anticipated as a result of this initiative

“Time-to-market”:

• A final UPI system is not expected to be completed in the near-term

Current industry initiatives:

• The ISDA UPI initiative will involve versioning of the UPI and product 

taxonomy for all asset classes

• The identifiers currently used for CDS include versions

Conclusion

We agree with this recommendation since it is consistent with current

industry initiatives, specifically the ISDA UPI initiative. Adding a version

ID to a product definition is, in effect, changing/amending the product

definition. We expect a table would need to be developed that defines

the meaning of the different versions and the industry will need to 

access a "lookup table" to obtain a full understanding of what the

product is. Depending on how this table is constructed, the lookup will

consist of accessing the most recent version ID (in which case each

new version needs to incorporate relevant portions of all previous

versions) or all the versions to obtain the relevant changes over time.
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL 15

Interim Recommendation: Access – 4a

In order to make it efficient for interested parties to retrieve data, every SDR should provide the same standardized 

API. Access to different parts of the data would be configurable so that all parties could use the same API.

Assessment

Consistency with regulatory requirements:

• SDRs have a duty to provide to the CFTC real-time access to reported 

data via the internet or web-based application and also to effect 

scheduled data transfers to CFTC systems

• SDRs must implement adequate firewalls to protect data

• SDRs are required to have a strong corporate governance framework 

and DR-BC plans in place, as well as confidentiality and indemnification 

agreements

Cost and ease of implementation:

• Using a single API implemented across all SDRs, as compared to 

multiple APIs, would be cheaper for market participants

“Time-to-market”:

• Near-term deliverable - dependent on internal software development by 

SDRs

Conclusion

We agree that this recommendation would assist the industry and the

SDRs to comply with their reporting requirements and facilitate retrieval

and analysis of the data.
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL 16

Interim Recommendation: Storage – 4b

Swap participants should be given the ability to view all data reported to SDRs on swaps that they are party to over 

the life of such transactions. The reporting entity will need to be able to directly amend data, although this ability 

should be limited to reported data only. The counterparty should have the ability to report errors in data so that 

they may be corrected by the original reporting party or subject to some form of dispute resolution.

Assessment

Consistency with regulatory requirements:

• Access to data not publicly disseminated by market participants is 

prohibited, except for access to swap data by either counterparty to that 

swap

• SDRs have a duty to confirm the accuracy of data submitted

• The reporting counterparty must submit corrections as soon as possible 

after discovering errors or omissions to reported data

Cost and ease of implementation:

• The lines of connectivity established for reporting could be utilized for 

correcting errors and omissions

• Participants will need to maintain access controls to ensure that only 

authorized parties have access to this facility

Actionability:

• SDRs will need to consider security and connectivity when enabling 

counterparties to a swap to review data and propose corrections

Conclusion

We agree with this recommendation. We believe that SDRs should

establish a framework that is reasonably designed to ensure that swaps

data stored on their respective facilities is correct, and that such a

framework should (i) allow counterparties to review reported data to

ensure it is correct, and (ii) result in timely corrections to errors in

swaps data. We do not believe, however, that the CFTC should

prescribe the processes by which SDRs accomplish these tasks. For

example, SDRs may find it cheaper and more efficient to (i) allow

counterparties to a swap to review data submitted and propose

corrections, as necessary, and/or (ii) use SDR staff to amend incorrect

swaps data, rather than providing the reporting counterparty with the

ability to directly amend data. SDRs may find that it is not practical to

provide the reporting counterparty with the ability to directly amend

reported swaps data since this will require additional security

measures. We suggest that the TAC recommend that the CFTC

provide SDRs with the flexibility to determine and implement the

cheapest and most efficient processes to reasonably ensure that swaps

data stored in SDRs is accurate.
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL 17

Interim Recommendation: Access – 4c

The CFTC should establish more detailed requirements for the analysis of data by SDRs on a regular basis, as well 

as for ad hoc requests by the CFTC. Until the CFTC establishes more detailed requirements, including the 

expected types and urgency of requests, it is unknown what future functionalities SDRs will need to support, 

which has important implications from a software perspective. This information will also help SDRs determine the 

needed "computing horsepower" for their middle offices. 

Assessment

Consistency with regulatory requirements:

• SDRs are required to make data available to authorized regulators

• SDRs have a duty to monitor, screen and analyze reported swap data 

prior to submission to the CFTC

• SDRs are expected to routinely monitor data for the purpose of any 

ongoing swap surveillance objectives the CFTC may establish as well as 

for ad hoc requests.

Cost and ease of implementation:

• Cost and implementation is based on the complexity of the request for 

analysis and the format of the reported data

“Time-to-market”:

• Any analysis needs to be performed in a timely manner, but there may 

be a lag between the time the request is made to the time analysis is 

automated and done routinely, due to software development needs

Actionability:

• The CFTC may not know immediately what analysis is required from 

the reported swap data

Conclusion

We agree with this recommendation. Although SDRs are required to

perform ad hoc analysis from time-to-time on the reported data before

submitting to the CFTC, it would be beneficial for SDRs to have as

much advance notice as possible of potential ongoing swap

surveillance objectives that the CFTC may be considering. This will

allow the SDRs to better plan and manage their own resources and

operations and enable cost effective implementation when meeting

their obligations. Knowing what analyses they will have to perform will

allow SDRs to assess whether they have received the appropriate data.
© 2012 Promontory Financial Group, LLC. All rights reserved. CONFIDENTIAL 18

Interim Recommendation: Timing – 5

The initial data loaded into SDRs should be OTC swap data, as the primary goal of the relevant portion of the 

Dodd-Frank Act is to bring transparency to this sector of the market. With this in mind, the Subcommittee 

recommends the following sequence for required reporting into SDRs:

Assessment

Consistency with regulatory requirements:

• All reporting parties must be compliant with swap data regulatory and 

real-time reporting requirements by July 16, 2012 for credit and IR 

swaps, and by October 14, 2012 for other asset classes

“Time-to-market”:

• There is no sure way to ensure consistency internationally in a specified 

period of time, therefore, this should not be a prerequisite to the other 

tasks happening

Current industry initiatives:

• The political aspects of ensuring consistency across SDRs internationally 

are wide-reaching and are being discussed currently

Conclusion

We agree that each of the phases is needed for successfully

implementing the required reporting to SDRs. We would, however,

suggest the following sequence of events:

i) Report cleared and non-cleared trades as mandated

ii) Disseminate public data on a real-time basis

iii) Provide query functionality to appropriate regulators

iv) Provide more complex portfolio analytics to regulators

The consistent application of SDR requirements internationally

should be pursued concurrently with the above phases. Although

there is the risk of regulatory arbitrage, it may not be easily realized

in the short term. Achieving international consistency may take

some time but should not prohibit the domestic phases from

proceeding. The amended sequence of events reflects a path of

lesser resistance and easier transition. The reporting of cleared

trades should be achieved fairly easily and will chalk up an early

"win" and set the stage for successive phases.

• Phase 1: Insure that SDR requirements are international and 

applied consistently to avoid regulatory arbitrage

• Phase 2: Begin reporting of non-cleared trades

• Phase 3: Begin dissemination of public data on a real-time basis

• Phase 4: Require the reporting of cleared trades into SDRs

• Phase 5: Provide query functionality to regulators

• Phase 6: Provide more complex portfolio analytics to regulators