FSB wants more transparency for repo and securities lending markets

FSB wants transparencyBanks will be expected to comply with even tougher regulation in the repo and securities markets after the Financial Stability Board (FSB) set forth a fresh set of proposed standards and processes for global securities financing and data collection and aggregation. It’s the latest attempt to improve transparency in shadow banking and poses some major data management and data architecture questions for banks.

The FSB said enhanced data collection is vital for authorities to obtain more timely and comprehensive visibility into trends and developments in the markets.

Mark Carney, chairman of the body, believes this constitutes a key step to ensuring that authorities fully understand trends and risks in one of the core funding markets.

He says: “The global data collection and aggregation based on the FSB standards and processes will help transform securities financing markets into more transparent and resilient sources of financing that would better serve the needs of the economy.”

The proposals, which should be ready by the end of 2015, define the data elements for repos, securities lending and margin lending that both national and regional authorities will be asked to report for financial stability purposes.

In addition, the consultation document describes data architecture issues related to the data collection and transmission from the reporting entity to the national/regional authority and then from the national/regional to the global level.

It also contains six recommendations for the national/regional authorities to ensure the consistency, quality and the efficiency of the reporting framework.

Daniel Tarullo, chairman of the FSB Standing Committee on Supervisory and Regulatory Cooperation, added: “The implementation of the proposed standards and processes will allow authorities to establish a monitoring framework to support their efforts to effectively address financial stability risks stemming from securities financing.”

Comments and responses to consultation should be submitted by February 12th 2015.