CFTC Announces It Is Undercounting Size Of Swaps Market By As Much As $55 Trillion

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What is $55 trillion between friends? Very little according to the CFTC. In perhaps the biggest under the radar newsof the day - to be expected with every watercooler occupied by taper experts - the WSJ reportsthat the Commodity Futures Trading Commission said Wednesday that technical errorsat two so-called swaps data repositories, which collect and supply regulators with transaction data, have led the CFTC to misreport the overall size of the swaps market by undercounting its size. Isn't it curious how all these "glitches" always work out in the favor of preserving market calm and confidence and away from spooking investors and speculators? Either way, a better question is how big was the so called undercounting? The answer: as large as $55 trillion!

Regulators aren't sure how much the repositories are undercounting. One CFTC official familiar with the matter said the discrepancy could be as high as $55 trillion, though another official said the figure is closer to $10 trillion once regulators cancel out certain transactions to prevent double counting.

One just has to laugh: the total US swaps market is what - roughly $400 trillion? So... just add enough notional to that number equal to the GDP of the entire world- or 4 times the size of US GDP - and call it a day. And in this environment somehow the Fed and other central planners are expected to have any clue what they are doing on a day to day basis?

Naturally this discovery makes a mockery of such transaprency enchancing initatives as Dodd-Frank.

The lack of clarity over the size of the market may undermine a key plank of the 2010 Dodd-Frank law aimed at bringing transparency to the opaque derivatives market. Swaps, which were at the heart of the 2008 financial crisis, are complex financial contracts that allow financial firms and their clients to hedge against risks or bet on an asset's value.

The CFTC has issued a number of rules to bring transparency to swaps trading so regulators can detect risks that could pose a threat to a firm or the financial system.

It would appear that those rules, uh, failed. It gets better:

The CFTC said in a footnote to its weekly swaps report that the largest data repository, the Depository Trust & Clearing Corp., "has informed us that due to a…technical coding issue, the notional values in the interest rate asset class have been understated." The agency also reported "a processing error" by a separate repository operated by CME Group Inc. A CME spokeswoman didn't respond to a request for comment. A CFTC official characterized the data problems as "growing pains." The agency formally began to report swaps data on a weekly basis just last month.

A technical coding issue with 12 zeroes?

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I would like to have their accountant

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