IOSCO calls for greater collateral transparency
07 March 2016 Madrid
Image: Shutterstock
The International Organization of Securities Commissions (IOSCO) has joined industry voices in calling for a more granular data collection of collateral transactions.
IOSCO claims that as new regulations drive a growing trend of collateralisation to mitigate certain risk types, a greater understanding of the collateral market landscape is needed.
The supranational regulatory body also cited changes in market structure and the way market participants interact with each other as other drivers behind the growth of collateralised transactions.
“Very little data exists on the demand for [collateral transformation] services,” IOSCO stated in its Securities Markets Risk Outlook 2016 report.
“To achieve better monitoring and surveillance of such a market-wide activity, better quality and quantity of data are necessary. Currently, comprehensive, detailed data are not available. What does exist is piecemeal, covering specific segments of the industry, as mentioned previously. This makes a true assessment of the activity more difficult.”
The Committee on the Global Financial System, the Office of Financial Research and the US Federal Reserve have also highlighted the need for a more coherent overview of the potential risks that more collateral transactions might pose to the global financial market.
Additionally, the Investment Industry Regulatory Organization of Canada (IIROC), the self-regulatory organisation for investment dealers, has begun phasing in reporting for its members.
Under the changes, they will be required to report all fixed income transactions, including repo and reverse repo transactions, on a post-trade basis.
The IIROC intends to make an aggregate of statistics public, rather than the underlying transactions.
IOSCO claims that as new regulations drive a growing trend of collateralisation to mitigate certain risk types, a greater understanding of the collateral market landscape is needed.
The supranational regulatory body also cited changes in market structure and the way market participants interact with each other as other drivers behind the growth of collateralised transactions.
“Very little data exists on the demand for [collateral transformation] services,” IOSCO stated in its Securities Markets Risk Outlook 2016 report.
“To achieve better monitoring and surveillance of such a market-wide activity, better quality and quantity of data are necessary. Currently, comprehensive, detailed data are not available. What does exist is piecemeal, covering specific segments of the industry, as mentioned previously. This makes a true assessment of the activity more difficult.”
The Committee on the Global Financial System, the Office of Financial Research and the US Federal Reserve have also highlighted the need for a more coherent overview of the potential risks that more collateral transactions might pose to the global financial market.
Additionally, the Investment Industry Regulatory Organization of Canada (IIROC), the self-regulatory organisation for investment dealers, has begun phasing in reporting for its members.
Under the changes, they will be required to report all fixed income transactions, including repo and reverse repo transactions, on a post-trade basis.
The IIROC intends to make an aggregate of statistics public, rather than the underlying transactions.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
