On 30 September 2024, the United States’ Commodity Futures Trading Commission (US CFTC) announced that Barclays Bank PLC had reached a settlement in response to charges of violating several key reporting regulations under the United States Commodity Exchange Act. These violations occurred between 2018 and 2023 and involved Barclays’ failure to accurately and timely report over five million swap transactions. These errors, which resulted from systemic deficiencies in Barclays’ reporting systems, impacted the US CFTC’s ability to assess market exposure, monitor compliance, and maintain market integrity.
The CFTC initiated proceedings under Sections 6(c) and 6(d) of the US Commodity Exchange Act, based on the bank’s violations of Sections 2(a)(13) and 4r(a)(3), as well as Regulations 43.3 and 45.3-4. Barclays admitted to the findings and acknowledged that it had failed to meet the reporting standards required by the CFTC during the Relevant Period. The errors were widespread, with failures related to duplicate swap identifiers, incorrect reporting of primary economic terms, misreported timestamps, and issues with continuation data. The reporting failures not only impacted individual transactions but also posed a risk to the transparency and systemic stability of the broader financial market.
A key part of the proceedings revealed that Barclays misreported data across more than 50,000 transactions due to assigning identical identifiers to different swap transactions, effectively conflating distinct swaps. Further, 129,000 transactions involving credit and interest rate swaps were incorrectly reported with inaccurate economic terms. The US CFTC also identified 121,000 transactions where timestamps were overwritten, leading to inaccurate records. The largest issue arose with over 4.5 million transactions, where Barclays submitted stale or incorrect continuation data.
Barclays cooperated with the US CFTC throughout the investigation, voluntarily disclosing details of its reporting deficiencies and taking remedial actions to address the underlying issues. The bank’s cooperation, which included providing extensive documentation and information, was considered when determining the sanctions imposed. As part of the settlement, Barclays agreed to pay a $4 million civil monetary penalty and committed to improving its internal reporting systems to prevent future violations.
Swap transactions are part of the global financial market infrastructure, and failures in reporting can obscure the real-time understanding of market risk, liquidity, and pricing. This case, involving millions of misreported transactions, highlights the importance of robust internal controls and the need for transparency in financial reporting systems.
Barclays is required to cease any further violations of the relevant sections of the US Commodity Exchange Act and continue to engage in the remedial processes it has begun. The CFTC emphasized the importance of accurate swap reporting for the protection of market participants and the overall integrity of the financial system. Barclays’ settlement, including its monetary penalty and compliance commitments, marks a significant step in addressing the lapses in regulatory compliance, while also serving as a reminder of the crucial role accurate data reporting plays in maintaining fair and transparent markets.
(Source: https://www.cftc.gov/media/11401/enfbarclaysbankplcorder093024/download, https://www.cftc.gov/PressRoom/PressReleases/8988-24)
