The Financial Stability Board (FSB) wants all authorities to collect data on securities financing markets in order to detect financial stability risks and develop policy responses. The FSB wants access to this data for aggregation in order to assess global trends in financial stability.

Mark Carney, chairman of the FSB, said that "the proposed standards are an important step to ensure that authorities fully understand trends and risks in one of the core funding markets for wide range of market participants. 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 FSB said that although securities financing transactions play "crucial roles" in supporting price discovery and secondary market liquidity for a variety of securities, they could also be used by market participants to take on leverage and engage in liquidity and maturity transformation.

"An enhanced data collection on securities financing markets is needed for authorities to obtain more timely and comprehensive visibility into trends and developments in these markets," stated the report.

The proposed standards and processes in the consultative document define the data elements for repos, securities lending and margin lending that national and regional authorities will be asked to report as aggregates to the FSB for financial stability purposes. 

The document also 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. To ensure the consistency and the efficiency, six recommendations to authorities are proposed. 

Furthermore, the potential uses of the aggregated data are discussed and the next steps for the completion of the initiative are outlined.

The FSB will complete its work on developing standards and processes by the end of 2015, based on the public consultation findings and further discussion with market participants. By then, the FSB will also develop an implementation timeline for the global data collection and aggregation. After that, the publication of relevant aggregates on the global securities financing markets to improve market transparency will be considered.

"Timely, comprehensive and consistent data collection is essential for authorities in identifying the build-up of leverage and other financial stability risks in global securities financing markets. 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," said Daniel Tarullo, chairman of the FSB Standing Committee on Supervisory and Regulatory Cooperation.