CFTC’s 'bureaucratic territoriality' impedes clearinghouse stress tests, report says

20 December 2018 9:03am
The US Commodity Futures Trading Commission’s development of clearinghouse stress tests has been set back by more than a year and a half due to “bureaucratic territoriality” exercised by a former senior CFTC staffer, an internal report said.

John Lawton, who reported directly to Chairman J. Christopher Giancarlo as interim clearing and risk chief for most of 2017, and Chicago-based aides abruptly “shut down and abandoned” a technical unit’s more effective and independent testing tools, the CFTC inspector general's report released yesterday said.

Instead, Lawton and others started from the ground up and pursued a testing approach that still lacks the ability to incorporate widely traded uncleared swaps in a comprehensive model across asset classes, the February 2018 report said.