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FSB urgently calls for more sec finance data
03 September 2013
The board has published its long-awaited final recommendations for the securities lending and repo markets
The Financial Stability Board (FSB) has published its final policy recommendations for securities lending and repo following a public consultation at the end of 2012.
Among the 11 recommendations, FSB made a “high urgency” call for authorities to collect more granular data on exposures in these markets.
The FSB will leave national and regional authorities to decide how they would want to collect data but said it would play the role of global data aggregator and could make information on global trends in financial stability available to the public on a periodic basis.
A technical data experts group set up by the FSB will develop proposed standards and processes for data collection by the end of 2014, interacting closely with market participants.
Meanwhile, the Enhanced Disclosure Task Force will work on improving public disclosure of institutions’ securities finance activities.
The board said that data currently provided by market participants “falls well short” of what regulators would need to monitor systemic risk. Disclosure of transactions that do not involve cash such as collateral swaps is particularly poor, said the FSB.
Another recommendation was for authorities to review reporting requirements for fund managers to their end-investors. The FSB said fund managers need to improve their reporting to end-investors.
While the board acknowledged the need for different types of data for securities lending and repo, it stressed there must be some consistency across both in order to avoid market participants trying to get around transparency rules:
“The economic equivalence of, and similarities between, repo and securities lending transactions would easily enable market participants to circumvent transparency requirements targeted at only part of the market by re-characterising the transactions.”
The FSB has also launched a public consultation on a proposed regulatory framework for haircuts on securities lending and repo transactions that are not centrally cleared. Market participants can respond to the consultation until November 28.