September 23, 2014 / 1:15 PM / 4 years ago

Derivatives industry calls global reporting plan a dream

LONDON, Sept 23 (Reuters) - Plans for a global snapshot of risks in the financial derivatives market are a “dream” that must not detract regulators from tackling discrepancies in trade reporting, a top industry official said on Tuesday.

Following market mayhem after the collapse of Lehman Brothers bank in 2008, the Group of 20 economies (G20) agreed that data should be collected on who holds derivatives contracts like interest rate or credit default swaps.

The aim is to have a snapshot of who is exposed to any failing lender and where risks are building up in the market.

But so far 25 trade repositories in 11 countries have been set up to collect data, making it impossible for regulators to obtain the timely, clear picture they are looking for.

Last week, the G20’s regulatory task force, the Financial Stability Board (FSB), published proposals for a mechanism to collate and share data from repositories.

Scott O’Malia, appointed chief executive of the International Swaps and Derivatives Association (ISDA) in July, said such a global plan was for the future.

“Where regulators need to focus right now is working together to harmonise the convention of reporting, making sure we are doing an apples-with-apples comparison with the data,” O’Malia said.

O’Malia was previously a commissioner at the Commodity Futures Trading Commission, the main U.S. regulator for derivatives, where he helped to write the new rules for the industry.

“The sharing of data can easily be resolved but it’s going to take some time,” said O’Malia, who last year, while at the CFTC, described swaps reporting as a “mess”.

He cast doubt on Tuesday on some of the practicalities of setting up a mechanism as outlined by the FSB, saying there was no global legislation to make such reporting requirements mandatory across the G20 countries.

“What authority would they have to compel reporting and consistency? That may be a nice vision for the future but the reality is dealing with what we have today and making that work. You can’t let this dream hold us back from harmonising the regulation and being able to share the data,” O’Malia said. (Reporting by Huw Jones; Editing by Clara Ferreira Marques)

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