Home   News   Features   Interviews   Magazine Archive   Symposium   Industry Awards  
Subscribe
Securites Lending Times logo
Leading the Way

Global Securities Finance News and Commentary
≔ Menu
Securites Lending Times logo
Leading the Way

Global Securities Finance News and Commentary
News by section
Subscribe
⨂ Close
  1. HomeRegulation news
  2. OFR proposes daily trade reporting for bilateral repo
Regulation news

OFR proposes daily trade reporting for bilateral repo


06 January 2023 US
Reporter: Bob Currie

Generic business image for news article
Image: daylight/stock.adobe.com
The Office of Financial Research (OFR) of the US Treasury department has proposed new daily reporting obligations for bilateral repo trades designed to improve risk supervision in this area of the securities financing markets.

The OFR proposes that high-quality data are essential to assess and monitor prevailing risks in repo markets and other market segments. However, historically, it suggests that little data has been available to regulators on non-centrally cleared repo transactions.

Having started to close this data gap in 2019 by introducing trade reporting requirements for centrally cleared repo transactions, it has now turned its attention to the non-centrally cleared bilateral repo market.

According to the OFR, this bilateral segment of the repo market, where repo transactions are conducted between two firms without a central counterparty or tri-party custodian, is a blind spot for regulators.

The Financial Stability Oversight Council, among other bodies, recommended that the OFR consider ways to obtain better data on the non-centrally cleared bilateral repurchase agreement market, recognising that this represents an important source of leverage for hedge funds.

After discussions with market participants and consultations with the Council, as well as a pilot data collection initiative, the OFR has opted to move forward with a permanent data collection initiative.

Through this programme, firms will be required to submit trade and collateral information on all outstanding bilateral repurchase agreement transactions, providing 33 data elements, including haircut, rate and optionality, on a daily basis.

The OFR estimates approximately 40 entities, including primary and nonprimary dealers, and bank and nonbank-affiliated dealers, will be covered by the rule if it is adopted.

Commenting on the proposal, OFR deputy director of operations James Martin says: “This initiative to provide better visibility into this opaque financial market segment is vital to helping to ensure financial stability.

“When significant stress on US treasuries spilled into the repo market in March 2020, regulators did not have full insight into the segment of the repo market where participants were most active, namely the non-centrally cleared bilateral segment. This was due, in part, to the lack of data reported to officials on these transactions.

“The OFR is proposing to fill this data gap, and provide regulators with more insight into Treasury market functioning, by requiring the largest institutions in the repo market to submit data on their non-centrally cleared bilateral transactions to the OFR each day.”

The OFR has launched a consultation on the Proposed Rule, with respondents asked to submit their comments within 60 days of the proposal appearing in the Federal Register.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
Advertisement
Subscribe today
Knowledge base

Explore our extensive directory to find all the essential contacts you need

Visit our directory →
Glossary terms in this article
→ Collateral
→ Custodian
→ Haircut
→ Hedge
→ Leverage
→ Repo

Discover definitions, explanations and related news articles in our glossary

Visit our glossary →