Sir, Regulators are right to point out that a common financial language is essential to addressing some of the failings that were made apparent during the financial crisis (“We need a common language for data to prevent next Lehman”, Insight, January 15). However, agreeing on a common language, while an important step, will have limited impact if we do not address a number of practical and legal barriers that make cross-border data sharing difficult, if not outright impossible.
If we look at the derivatives markets, whose opacity was largely blamed for the last financial crisis, global regulators and the industry have made significant strides in addressing the data gap that existed in 2008. However, while trade repositories were heralded as an essential pillar of systemic risk management, the global derivatives reporting regime that emerged following the crisis is fragmented along national lines. Five years since the system was devised, cross-border identification of risk remains extremely difficult for macroprudential authorities.
To ensure that the lack of transparency which nearly brought the financial system to collapse can be addressed, a clear timetable needs to be agreed for the removal of legal barriers — namely national legislation in some of the major derivatives jurisdictions that prevents cross border data sharing among regulators. Without this commitment, the lessons of the last crisis have not been truly learnt.
Managing Director and General Counsel,
Depository Trust and Clearing
Jersey City, NJ, US