Nine Banks Tapped to Provide Regulators With Repo Data
March 01 2016 - 2:10PM
Dow Jones News
The Treasury Department's Office of Financial Research disclosed
the names of nine banks that it is using to collect data on a piece
of Wall Street plumbing that gained notoriety in the financial
crisis.
The OFR said the data-collection pilot on repurchase agreements,
or repos, announced a few months ago is being conducted with Bank
of America Corp., Barclays PLC, Deutsche Bank AG, Goldman Sachs
Group Inc., HSBC Holdings PLC, J.P. Morgan Chase & Co., Morgan
Stanley, Royal Bank of Scotland Group PLC and UBS Group AG.
The Federal Reserve and Securities and Exchange Commission are
working with the OFR to conduct the pilot program.
"The project marks the first time the OFR went directly to
industry to collect financial market information," it said in the
statement. "But participation in the pilot project was voluntary,
and participating companies provided input on what data should be
gathered."
The Journal earlier reported the participation by Morgan Stanley
in the study.
The disclosure of the full panel of banks involved comes as the
OFR on Tuesday posted instructions for how the banks would submit
their information on trades into the survey. Bank holding
companies, for example, are asked to submit separate data for U.S.
broker dealer subsidiaries that they own or control to avoid
double-counting.
The OFR's mission is to collect data on so-called "bilateral"
repos, or short-term loans between financial institutions that are
backed by securities but aren't routed through a clearing agent.
Such bilateral trades have been hard for international regulators
to monitor because they are one-to-one negotiated trades that
typically don't involve the use of industry clearing companies.
In January, the Fed and OFR referenced the data pilot in a joint
research paper, saying they were looking for "permanent granular"
measures on the bilateral corner of the circa $3 trillion repo
market for which data has been challenging to collect. More
comprehensive data already exist on the repos that involve
third-party clearing firms for settlement, called tri-party
repos.
Stacey Schreft, deputy director for research and analysis at the
OFR, said in a brief on the pilot that it could produce the "first
statistics" on the bilateral repos that are estimated at around
$1.8 trillion.
Regulators care about better monitoring of the overall repos,
including bilateral trades, because the market is at the center of
how cash and securities are channeled through Wall Street firms.
"During the financial crisis, distress hit the repo market and fed
back into other parts of the financial system," Ms. Schreft wrote
in her brief.
In an OFR meeting of the Financial Research Advisory Committee
last summer, two OFR researchers said data gathered from a 2014
project involving the Securities and Exchange Commission had been
"inconsistent" in part because trading firms suffered from a "lack
of standard identifiers" and their "recording systems were
inaccurate or incomplete."
The Fed, OFR and SEC are now working on a second pilot program
focused on securities-lending transactions.
Write to Katy Burne at katy.burne@wsj.com
(END) Dow Jones Newswires
March 01, 2016 14:55 ET (19:55 GMT)
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