Regulatory Outreach for Student Education

Engaging Students in the Debate Over Financial Services Reform

Today’s debate over regulatory reform is a watershed activity in the careers of financial industry professionals. Years ago, similar debates over mandated pre-funding of pension liabilities (ERISA) and the reunification of investment banking with commercial banking (Glass Steagall's repeal) changed the direction of financial market evolution. Opinions may differ on the merits of those changes, but no one disputes their significance.

Without question, college students and young professionals should be well-versed in the issues involved in today's debate. The Regulatory Outreach for Student Education (ROSE) program is the Center's way to give top students, tomorrow's business and finance leaders, opportunities to experience the financial regulatory process up-close.  The ROSE program is designed to put students in touch with the regulators, policy-makers, and industry leaders who are currently shaping the financial regulatory landscape.  We then challenge them to research and articulate their own positions on the most intriguing and interesting issues.  

ROSE Program Blog

Monday, October 10, 2016

FSOC Wants Better Securities Lending and Repo Data


Author: David Schwartz J.D. CPA

In its 2016 annual report published in July, the Financial Stability Oversight Council (FSOC) said that more and better data was needed to assess the potential systemic risks associated with securities lending and repo.  The super-regulator called for more transparency and better data collection from both lenders and borrowers in securities lending and repo markets. “Without comprehensive information on securities lending activities across the financial system,” the FSOC report said,"regulators cannot fully assess the severity of potential risks to financial stability in this area.” In addition, the FSOC recommended better coordination of data collection by U.S. regulators with their foreign counterparts, noting that “current estimates suggest that half of global securities lending activities take place outside of the United States.”  Better international cross-border data coordination is necessary because, "the extent to which particular market participants operate across national boundaries is not clear from available data, so it is difficult for regulators to determine how stresses in a foreign jurisdiction may affect securities lending activities in the United States."

 

The FSOC reiterated its need for better data at its September 22 meeting when it received a proposal from the Office of Financial Research (OFR) to establish a permanent collection of bilateral repurchase agreement data. This OFR proposal was based on its August 2016 pilot survey on securities lending, which identified data gaps in both securities lending and repo.  

 

The full text of the FSOC’s 2016 annual report is available via:  https://www.treasury.gov/initiatives/fsoc/studies-reports/Documents/FSOC%202016%20Annual%20Report.pdf

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