Julian Eyre | published on 9th November 2018

Central banks call for an increase in trade data quality and coverage

Simon Davies – The new BIS / IFC report (here) on the use of captured derivatives transaction reporting to TRs and central banks from BIS, emphasises the need for increasing the quality of data reported.

Financial Stability Board (FSB) jurisdictions feel that the data gathered on OTC and some exchange traded derivatives is good, but there are challenges for regulators to get access to information across borders.  Additionally, data coverage is generally good, but there are gaps that the regulators would like to see closed – especially around counterpart details and the use of common identifiers.

The main challenge is around the quality of the data collected, and this is inconsistent across jurisdictions, resulting in the need for regulators to conduct data quality checks.

The report calls for additional regulation to help resolve this data quality gap with international co-operation and the use of market infrastructure to aid this, such as improving data gathered from CCPs.  Importantly, the authors emphasis the critical value central banks find in using the data to get an overview of systemic risk, and despite the perception of the industry – regulators are actively using and analysis the data gathered – and the sheer volume of it is not prohibiting them from doing so.

Whilst firms could be subject to changes in existing data reporting, and additional regimes – such as SFTR, they should be reviewing the quality and consistency of data that they are reporting under the various reporting regimes, and how this is sourced, managed and used within organisations.  Along with better quality reporting, this can have a substantial benefit for organisation and help manage and reduce costs.

For more information contact us at info@thefieldeffect.co.uk

https://www.bis.org/ifc/publ/ifc_report_cb_trade_rep_deriv_data.pdf