Deutsche Bank is facing sanctions from US regulators over a catalogue of failures that afflicted its swaps data reporting functions.
The US Commodity Futures Trading Commission is seeking a monetary penalty and a permanent injunction against the German bank after a five-day systems outage prevented it from reporting swaps data and uncovered a host of other disaster recovery and trade reporting lapses.
The regulatory body says that Deutsche Bank’s efforts to fix the glitch in April 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. It goes on to complain that many of the violations centre on Deutsche Bank's failure to have an adequate business continuity and disaster recovery plan and other appropriate supervisory systems in place.
Alongside a penalty fee, the CFTC is seeking the appointment of an independent monitor to assess Deutsche Bank’s swap data reporting activities, including its policies, procedures, infrastructure, and systems.
CFTC director of enforcement Aitan Goelman comments: “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 admonishment is a huge embarrassment for the bank, coming less than a year after it was forced to pay a $2.5 million penalty imposed by the CFTC over previous swaps reporting failures.