23 October 2014

FSB moots development of global trade data utility

19 April 2013  |  4138 views  |  0 Cloud plug close up

The Financial Stability Board has mooted the creation of a central utility for sharing aggregated trade data, as evidence mounts that national jurisdictions are lagging in implementing OTC derivatives trading reforms.

In its fifth quarterly progress report on international efforts to push over-the-counter derivatives trading to electronic platforms, the FSB states that not one of the 24 jurisdictions under its aegis have fully implemented guidelines first laid down in 2009.

Less than half of the FSB member jurisdictions currently have legislative and regulatory frameworks in place to implement reforms "and there remains significant scope for increases in trade reporting, central clearing, and exchange and electronic platform trading in global OTC derivatives markets".

The FSB urges rapid progress by those jurisdictions that have not yet completed their legislative and regulatory frameworks. FSB Chairman Mark Carney has written to all member jurisdictions requesting confirmation that legislation and regulation for reporting to trade repositories are in place, as well as their committed timetables to complete all OTC derivatives reforms.

He stressed that the need for prompt action on trade reporting should not in any way diminish the need for rapid completion of reforms in other areas, such as central clearing, capital and margining, and trading on exchanges or electronic platforms.

While much work remains to be done at the national level, progress is also needed in international co-ordination, says the FSB, which warns of the emergence of some "cross-border potential conflicts, inconsistencies, duplication and gaps".

Although this is not unexpected given the complexity of the rules, it is "imperative that regulators work together to urgently address identified issues", states the FSB.

The body is also pushing for more international work on remaining issues around authorities' access to trade repository data, such as data standards.

It additionally calls on regulators to explore the feasibility of a "centralised or other mechanism to produce and share global aggregated data, taking into account legal and technical issues and the aggregated trade repository data that authorities need to fulfil their mandates and to monitor financial stability".

Looking forward, an increased focus will be needed on how effective reforms have been in meeting the underlying objectives, says the FSB, as well as risks of regulatory arbitrage that would undermine the effectiveness of the new regime.

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