CFTC Approved to Pay Whistleblowers

A new whistleblower rulemaking has been approved by the US Commodity Futures Trading Commission, paving the way for "nefarious" fraud and manipulation in the market to be exposed.

The hearing in Washington DC also saw a rule on swap data collectors, and another enabling agricultural swaps to be treated like other over the counter derivatives, given the green light.

Approved by four votes to one on Thursday by CFTC commissioners, the whistleblower measure provides incentives for company executives to reveal violations of the Commodity Exchange Act.

It gives the CFTC the power to award cash to whistleblowers when their information leads to a successful enforcement action with a sanction over $1m (€0.7m).

Bart Chilton, who voted in support of the measure, said it would be an "important tool in the Commissions' enforcement arsenal".

"It can give needed incentives for folks - precisely the people we want to hear from, those who have an eye 'from the inside' on essential information about nefarious schemes - to come forward, with needed protections," Chilton said. Commissioners also approved by 4-1 a rule enacting standards for new swap data repositories, or SDRs.

Under the Dodd Frank Act, SDRs are mandated to maintain and collect information related to swap transactions, which then must be made available to regulators upon request.

The standards endorse core principles applicable to SDRs, including the designation of a chief compliance officer and a number of provisions surrounding transparency.

However, SDRs would not have to comply with all of the new requirements until a series of related rules are completed, including the definition of a swap, CFTC staff member Jeffrey Burns told the meeting.

"This rule will enhance transparency in the swaps market and help reduce systemic risk," said CFTC chairman Gary Gensler, supporting the measure.

Chilton hailed it as a "great reg[ulation]", arguing that without it "we could end up in the same economic calamity we were...