It had to happen. The Commodity Futures Trading Commission (CFTC) in the US has finally begun an overhaul of information collected by the Depository Trust & Clearing Corp. (DTCC), CME Group Inc., and others, because they cannot fully understand the swaps-market data.

CTFTC, the top U.S. derivatives regulator, released a request for comment yesterday on about 70 questions on ways to change how and which information must be reported to the swap-data repositories created under Dodd-Frank Act rules. The CFTC could later propose changes to policies intended to help regulators supervise the $693 trillion market.

Apparently, “The data we’ve received frankly hasn’t been clean enough for us to make sense of it as easily and as quickly as we need to be able to do,” Mark Wetjen, the CFTC’s acting chairman, said at a U.S. Chamber of Commerce conference in Washington. “We’re prepared to make corrections if we need to.”

The CFTC and Securities and Exchange Commission were required by Dodd-Frank, the 2010 regulatory overhaul, to create rules for the databases to ensure authorities can spot risks in the financial system. Regulators lacked complete understanding of how interconnected banks had become through the swaps market before the collapse of Lehman Brothers Holdings Inc. during the 2008 credit crisis.

Previous warnings about data adequacy

In March 2013, Scott O’Malia, a Republican CFTC commissioner, raised questions about the adequacy of the data rules. He believed that the data was failing to give regulators a full picture of the swaps market and wouldn’t help them detect a loss similar to JPMorgan Chase & Co.’s London Whale trades. And in a speech last week, he said that “We have a long way to go. The commission needs to be precise about what it wants from the market.”

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CTMfile take: When will the ESMA admit that they don’t understand what is happening in the derivatives market based on the EMIR data they are collecting, and then ask the trade repositories in Europe what should be done to improve their understanding?