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10 February 2014

Reuters: US regulator tells banks to improve derivatives data


The US CFTC chided the industry for providing gappy data on the $630 trillion market, highlighting a rising concern for regulators around the world.

The Commission has repeatedly said that a deluge of swaps trading is overwhelming its computers since reporting started a year ago, and that it still cannot adequately monitor risk. Global regulators highlighted a lack of reliable data as a major concern last month, five years after the financial crisis brought to light how little insight financial watchdogs have into banks' risks.

The industry also has its part to play, staff said in a meeting of its Technology Advisory Committee (TAC) of banks and exchange operators, after a year in which the agency helped them ease into the new rules. "I do want to get away from the handholding", said Vincent McGonagle, the CFTC's head of the Division of Market Oversight. "It is clear that there are issues where parties are not reporting", he said.

In a report to the Financial Stability Board - which groups together supervisors of the G20 nations with the strongest economies - they said countries and companies should make improving data quality a top priority.

A year ago, Scott O'Malia - who chairs the TAC - said the agency was unable to locate JPMorgan's $6.2 billion loss on credit default swaps in its data, blaming a lack of clarity in the agency's rules. Staff at the meeting said they were still too busy sorting through the data to start monitoring such systemic risk, and could not give a timeline of when that would change.

Full article



© Reuters


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