Global regulators want to overcome a data-sharing impasse that threatens to undermine post-crisis market reform with a central utility that oversees sharing of sensitive derivatives information.

The Financial Stability Board, a national regulators’ umbrella association, on Friday recommended creating a single centralised repository, either physical or digital, to draw together fragmented data on trades for over-the-counter derivatives, worth a notional $700tn.

Its recommendation of a single entity, instead of a patchwork system in which regulators would have to collect their own information, is an attempt to overcome a barrier to efforts to reform markets.

The G20 mandated governments create a composite record of derivatives deals to better spot potential systemic risk in banks and clearing houses. At present there are 25 repositories operating in 11 jurisdictions around the world and no framework yet exists that would allow global regulators to track or monitor risk in big, cross-border markets. However, the policy has created a problem as countries come up against their own data-privacy and confidentiality laws.

Regulators have worried that no authority would be able to examine in detail the complex global network of OTC markets and that concern has been further exacerbated by concerns over different standards of data reporting.

The FSB study found a centralised utility to aggregate data as “highly preferable” as it would “ensure that authorities have access to the aggregated data that they need in order to perform their mandates and meet the G20 objectives”.

Earlier this week Australia and Singapore became the first countries to allow their regulators mutual access to trading data stored in electronic warehouses in each country.

While the FSB acknowledged that countries sharing raw data were the only option currently available, “it has practical limitations that allow it to meet only part of authorities’ data needs, beyond protecting against market abuse”.

The FSB also said that the repository needed to be done in conjunction with the global introduction of legal entity identifiers (LEIs) – an alphanumeric code that would uniquely mark each party to a trade.

Attempts to create legal entity identifiers for individual deals has foundered on regulatory disagreements on standards, although take-up of LEIs has been growing as trade reporting becomes mandatory.

The FSB said a working group set up by the Committee on Payments and Market Infrastructures, which falls under the Bank for International Settlements, and the International Organisation of Securities Commissions is examining ways to harmonise access to trade repositories and is due to report to the G20 group of nations at a meeting in Brisbane in November.

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