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Derivatives

FSB Eyes Global Trade Repository Aggregation

Global aggregation of trade repository data is essential to enable comprehensive monitoring of risks to financial stability, according to the Financial Stability Board.

Global aggregation of trade repository data is essential to enable comprehensive monitoring of risks to financial stability, according to the Financial Stability Board.

In a meeting in Basel yesterday, the FSB discussed progress in authorities’ work to strengthen financial regulation and noted that the Board has launched a feasibility study of options for how information from trade repositories can be aggregated and shared among authorities. The results of the study will be published in the first half of 2014.

The FSB also discussed cross-border application of over-the-counter derivatives regulation, stressing the importance and urgency of resolving issues surrounding cross-border rules given the highly international nature of the derivatives markets. The FSB noted that it is important that remaining differences between jurisdictions’ rules and implementation timetables are bridged ahead of the G20 summit in September.

It was noted that some jurisdictions need to continue to improve the capitalization of their banking systems; however, the FSB welcomed the progress made by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions in developing final international standards for margining requirements for non-centrally cleared derivatives trades and capital requirements relating to exposures to central counterparties.

The FSB also noted that over recent weeks, volatility in interest rates, asset prices and capital flows has increased; therefore, market participants and supervisory authorities should incorporate in their stress tests scenarios that involve considerable elevated interest rate risk, widening credit spreads, falls in asset prices and material volatility in fx markets and capital flows.

Other topics discussed included, the London interbank offered rate and other financial benchmarks, the resolution of financial institutions and shadow banking.

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