FSB Proposes Reporting of Securities Financing in Shadow Banking Crack-Down

The Financial Stability Board (FSB) has proposed new rules on the collection of data from the securities financing market, whereby firms will have to report their repo and securities lending activities to national and regional regulators.
By Joe Parsons(2147488729)
The Financial Stability Board (FSB) has proposed new rules on the collection of data from the securities financing market, whereby firms will have to report their repo and securities lending activities to national and regional regulators.

The FSB proposed the rules in a public consultation released on Thursday at the G20 Summit in Australia. The plans on data collection of securities financing is the latest move from the international body as it looks to crack-down on the shadow banking industry.

In the report, the FSB recommends national and regional authorities to collect data on transactions such as securities lending and repos to detect financial stability risks and develop policy responses.

“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,” says Mark Carney, chairman of the FSB and governor of the Bank of England.

“The global collection and aggregation based on the FSB standards and process will help transform securities financing markets into more transparent and resilient sources of financing that would better serve the needs of the economy.”

The standards set out in the consultation are based on the FSB’s report on ‘shadow banking risks in securities lending and repos’, published in August 2013.

To ensure consistency and quality among national/regional data collections, the FSB recommends the use of internationally agreed standard identifiers, such as legal entity indicators (LEI), to identify counterparty types and reduce the reporting burden.

The consultation period ends on February 12 2015, and the FSB plans to complete work on developing standards and the processes of reporting by the end of next year.

“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,” adds Daniel Tarullo, chairman of the FSB standing committee on supervisory and regulatory cooperation.

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