Great piece from the international Financial Stability Board, highlighting a myriad of issues that need to be resolved before international swaps data can be effecviely collected, managed and analyzed.
The Financial Stability Board’s report “Requirements for Swaps Data Aggregation in Trade Repositories” (the “Report”), released on Sept 19, was intended to settle the question of how to obtain a complete view of swaps transactions entered into between counterparties anywhere in the world. This was to be the first step on a longer journey to aggregate financial transaction data from all financial market participants in all financial assets so that regulators can observe the contagion of systemic risk building up across the financial system, the issue brought to prominence by the Lehman failure. Swaps trades are now captured in multiple, geographically dispersed trade repositories (TRs) and cannot be aggregated. This is due to the premature launch of the swaps regulatory regime in the US, the subsequent lack of a global standard for the data comprising reportable swaps transactions, and the absence of a mechanism to identify the business owner of a multiple set of counterparties comprising a single business entity.