The Financial Conduct Authority (FCA) says that it still has “a way to go” in developing the capabilities to use the huge amount of data generated by the EMIR trade reporting rules.
Speaking on a panel at the recent FIMA Europe conference, Tom Springbett (pictured), head of OTC derivatives and post-trade policy at the FCA, set out the regulator’s objectives with regard to OTC derivatives data but admitted, “We are still a fair way from achieving that. The quality of the data isn’t yet good enough.”
Sprinbett said the regulator’s aim in respect of OTC derivatives was twofold:
- The next time there is a big financial crisis (“presumably there will be at some point”) the regulator will be able to look at a troubled entity and see which other entities it is exposed to in OTC derivatives. “We’ll be able to look at the whole web of the market and see what the impact of failure or multiple failures would be, with some confidence,” he said.
- The other objective is to be able to see trouble coming, in advance. “We should be able to keep an eye on the market and to identify things that might be a cause for concern,” Springbett said.
He said that there had been “pretty good compliance and a lot of well-directed effort trying to get consistent reporting” but that there was still a long way to go”. He added: “We still manage to find lots of problems with the data so there is more for the industry to do and there is also more for the regulators to do.”
He said that regulators needed to clarify what they expect better than they have done so far, adding that the recently-announced ESMA consultation was “a good step in that direction”.