LONDON Feb 12 Regulators may not get the full
benefit of reforms allowing them to better to spot risks in
global derivatives markets unless obstacles to cross-border data
sharing are removed, a U.S. industry official said.
Leaders of the world's top 20 economies (G20) agreed in 2009
during the financial crisis that derivatives were too opaque and
trades must be recorded at a repository to give regulators a
snapshot of who is behind each transaction.
Failure to know who was exposed to derivatives-laden U.S.
bank Lehman Brothers when it collapsed in September 2008 sent a
wave of uncertainty through global markets.
As derivatives are traded across borders, regulators must
agree to share data held in repositories if they are to piece
together a full picture of exposure.
The U.S. Depository Trust & Clearing Corp (DTCC) has been
building a global network of centres for banks and brokers to
record derivatives transactions.
"There are fairly major impediments to data sharing at the
moment," Stewart Macbeth, president of DTCC's Deriv/SERV unit
told journalists on Wednesday.
In the European Union, the European Securities and Markets
Authority can only share data with a non-EU regulator if there
is reciprocity with that regulator, a tough hurdle.
Foreign regulators can access data in a U.S. repository only
if they agree to provide indemnity against the cost of any
leakage of data, a requirement none are willing to meet.
This is not the only extraterritorial clash in derivatives -
there are also cross-border spats over new clearing and trading
rules the G20 has called for.
EU financial services chief Michel Barnier will meet U.S.
regulators later this week to try an iron out overlaps.
While the DTCC, which operates repositories in the United
States and EU, wants to become a one-stop global repository, it
will need the removal of hurdles to data-sharing among
regulators for that to work effectively.
Macbeth said customers also want to avoid reporting the same
trades to different repositories. If there are many
repositories, it would be easier for regulators to get data
directly from the 14 or 15 big banks who make up the bulk of
global derivatives trading, he said.
(Reporting by Huw Jones; Editing by Dan Lalor)