3 Min Read
LONDON (Reuters) - 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 centers 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