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The Commitment of Traders report is a weekly publication that shows the aggregate holdings of different participants in the US futures markets. The reports are compiled and published by the Commodity Futures Trading Commission (CFTC). The COT data details how many long, short, and spread positions make up each futures markets open interest.

Open interest is the total number of open long and short positions in a futures market. Traders, investors, and analysts look to the weekly COT report for clues about producer, consumer, investor, and speculators' risk positions in the futures markets. The information can reveal a picture about a markets dynamics and help analysts understand price moves and volatility.

The COT report comes out each Friday afternoon. In a world where technology makes information immediately accessible, the CFTCs report is well behind the times. The COT is as stale as week-old bread when released each Friday.

While the weekly COT data comes out on Friday afternoon, the CFTC website highlights the COT reports provide a breakdown of each Tuesdays open interest for futures and options on futures markets in which 20 or more traders hold positions equal to or above reporting levels established by the CFTC.

The data is delayed by three business days. In the fast-moving futures arena, three days can be a lifetime as prices, risk positions, and open interest can experience dramatic changes from Tuesday to Friday each week. While many market participants continue to look at the COT data, it only provides a picture of positions that may have undergone significant changes by the release date.

The 2022 budget request for the Commodity Futures Trading Commission was $394 million. The request was for a $28 million increase of 9.2% from 2021.

While salaries and employment costs account for the lions share of the budget, technology is another area where the CFTC expends the annual budget. The financial institutions and exchanges regulated by the agency spend hundreds of millions each year to keep up with the latest technology. The CFTC must keep up with the rest of the market to be an effective and efficient regulator.

In 2020, CFTC enforcement actions totaled over $1.3 billion in fines and total monetary relief, the third consecutive year of year-over-year increases and the second year of over $1 billion in receipts. The bottom line is the CFTC is a self-funding agency that is a revenue center for the US government.

Moreover, the CFTCs mission statement is to promote the integrity, resilience, and vibrance of the US derivatives markets through sound regulation. One of its Core Values is clarity, Providing transparency to market participants about our rules and processes. While the COT data is an area where the agency provides transparent data, the delay from Tuesday to Friday makes the transparency less than efficient.

In a world where technology has made communication possible in nanoseconds, and vast amounts of data can flow worldwide in real time, there's no reason for any delay in the COT data. Moreover, technology makes it possible to allow for a real-time metric in COT data delayed only by the amount of time it takes the futures exchanges computers to transmit the data to the regulator.

According to its website, the COT data had not changed since early 2007, fifteen years ago, when the agency concluded a comprehensive review of the COT Reporting program that led to a supplemental COT report that was first released on Jan. 5, 2007.

For US regulators, transparency is a core mission. Technological advances only improve the potential for efficient, effective, and timely market data release.

The CFTC should request for an increase in its budget, with the funds earmarked for a program to make the commitment of trader data a real-time metric. After all, the agency is a profit center for the US government.

Real-time COT data would improve transparency for all market participants. Moreover, it would enhance the regulators ability to notice and address issues through its enforcement division.

Technology has brought incredible advances to our world. Fintech is the next step, and the US CFTC was the first agency to regulate cryptocurrencies, the assets that embody the evolution of the fintech revolution. The regulator needs to realize that, in its current form, the COT data is useless and a relic that made sense last century but does not in the fast-moving contemporary world. If the agency can regulate high-frequency trading and cope with the growing volumes in the futures arena over the past years, it can undoubtedly improve the COT reports, which will increase transparency in the markets it oversees.

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The CFTC Needs To Embrace Technology And Improve COT Data - Seeking Alpha