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Securities financing transactions such as securities lending and repurchase agreements (repos) play a crucial role in supporting price discovery and secondary market liquidity for a wide variety of securities. However, such transactions can also be used to take on leverage as well as maturity and liquidity mismatched exposures.
Enhanced data collection on securities financing markets is needed for authorities to obtain a more timely and comprehensive perspective on developments in these markets and detect financial stability risks. This data will be useful for the implementation of the FSB’s Regulatory framework for haircuts on non-centrally cleared securities financing transactions. The data will also serve the needs of a wide range of market participants and the economy, increasing the transparency of these markets.
The finalised standards and processes define the data elements for repos, securities lending and margin lending that national/regional authorities will be asked to report as aggregates to the FSB for financial stability purposes. The standards and processes describe data architecture issues related to the data collection and transmission from the reporting entity to the national/regional authority and then from the national/regional to the global level. To ensure consistency and to derive meaningful global aggregates, six recommendations to national/regional authorities are set out. Furthermore, the potential uses of the aggregated data are discussed and the next steps for the completion of the initiative, including a timeline for the implementation of the standards and processes, are outlined.
The FSB will start working on the detailed operational arrangements with a view to initiating the official global data collection and aggregation at the end of 2018. The Bank for International Settlements, leveraging on its expertise in managing international banking and financial statistics, has agreed to provide the operational support for the collection and potential dissemination of aggregated securities financing data.
A consultative version of the standards and processes was published in November 2014. In finalising the standards and processes, the FSB worked closely with market participants and would like to thank those who have taken the time and effort to share their views. The FSB plans to continue such collaboration in implementing the global securities financing data collection.