On April 23, 2015, the Office of Financial Research (“OFR”), the research arm of FSOC, published a brief entitled “Repo and Securities Lending: Improving Transparency with Better Data”. The brief reviewed the reporting by the major segments and major participants in the repo and securities lending markets. With respect to market segments the brief found the tri-party repo market to be the most transparent citing the information provided by the clearing banks and published on an aggregated basis by the Federal Reserve Bank of New York. With respect to market participants the OFR found that money market funds provide the most transparency with respect to their repo positions, noting specifically that “No other financial firms report the same level of detail about repo activities as money market funds do on Form N-MFP.” However, the OFR found several data gaps, such as in the bi-lateral repo market and with respect to dealers that are not affiliated with a bank-holding company, and also found data overlaps, such as reporting of the same trades twice and to different regulatory agencies.
The brief concluded that “[c]omprehensive data coverage is still lacking.” The brief noted that the OFA and the Federal Reserve launched a joint pilot project to “collect data to improve our understanding of bilateral repo and securities lending.” A number of large firms are participating in the pilot program which is expected to be completed “before the end of 2015.”
Good Day. Good Reporting. DR2