As the intercontinental collaboration between large, continental regulators continues, Mary Jo White, Chair of the US Securities and Exchange Commission (SEC) has today written a letter to Mark Carney, the Governor of the Bank of England and Chairman of the G20 Financial Stability Board in order to address barriers to reporting to trade depositories.
The United States was the first nation to implement its completely restructured trade reporting regulations for OTC derivatives, in the form of ensuring that all institutional FX firms process their trades via a central counterparty, as well as become subject to a stringent post-trade processing procedure that ensures total transparency.
In the letter, which was sent to Mr. Carney on August 12, Ms. White expresses concern that the Financial Stability Board (FSB) has an issue concerning the G20 commitment to report all OTC derivatives transactions to trade repositories, and recommends that the FSB acts to resolve this issue.
According to Ms. White, this particular issue relates to the existence of what the SEC views as barriers, including data protection laws, blocking statutes, and state secrecy laws as well as bank secrecy laws, that could serve to hamper reporting of counterparty identifying information to trade repositories.
Ms. White asserts that such barriers which could impede reporting are significantly reducing the effectiveness of reporting obligations and thus contravene the G20’s objectives which were outlined in the Leaders 2009 Pitsburgh communique.
On April 15, 2013, Mr. Carney had noted that in the longer term, trade repositories will be the source of comprehensive data on derivatives markets, but that the FSB needs to make sure that the relevent authorities have access to accurate and usable data.
At the time, Mr. Carney had concurred that challenges remained, specifically citing privacy restrictions in some jurisdictions that impede the reporting of necessary information for regulatory purposes.
Furthermore, Mr. Carney had also stated in April 2013 that such jurisdictions should remove barriers to trade reporting, with particular emphasis to be placed on ensuring that counterparty infromation can be accessed by authorities.
Ms. White asserted that this is a matter which the SEC has been closely following and insists that there is no possible method of conducting thorough trade reporting unless these barriers are removed.
The candid approach by Ms. White conveys to Mr. Carney that the SEC is concerned that despite Mr. Carney having noted these matters in April 2013, no action has been taken to remove these barriers by the G20 or FSB jurisdictions to address these barriers.
In insisting that action is taken to resolve the matter, Ms. White signed off by stating that Mr. Carney should consider seeking G20 leaders’ agreement for removing the barriers, and that the SEC is committed to continuing joint efforts, along with Australia, Canada, the United Kingdom, Singapore, Hong Kong and Switzerland, to ensure that a fully comprehensive, cross-border regulatory framework for trade reporting is achieved.
For the full letter, click here.