Commentary

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

Print

Journal Commentaries

 

Keep Regulation Functional (October 2008)

CSFME’s Executive Director Ed Blount interviews SEC Chairman Chris Cox.
American Banking Association Banking Journal
https://www.questia.com/library/journal/1G1-187494664/keep-functional-regulation-how-financial-regulation

 

The Bear Market Posse, or Counterparty Risk Management during the Recent Turmoil (Sept.  2008)

by Ed Blount
The RMA Journal, v91n1, 28-32, 5 pages Sep 2008.

 

Searching for New Paradigms at BIS (July 2008)

by Ed Blount
Unexpected deficiencies in bank capital after recent market turmoil has regulators rethinking aspects of Basel II and “value at risk.”  
American Banking Association Banking Journal  
https://www.questia.com/library/journal/1G1-181991450/searching-for-new-paradigms-at-bis-market-turmoil

 

Will Basel II Affect The Competitive Landscape? (September 2003)

By Ed Blount
Newly elected Basel Committee Chairman Caruana, Governor of the Bank of Spain, gives his views on the revised Basel capital accord, relative to its potential effects on competition and risk management in banking markets.
American Banking Association Banking Journal
https://www.questia.com/read/1G1-108008773/will-basel-ii-affect-the-competitive-landscape-the​