WASHINGTON–The Treasury Department’s financial research department said it has begun work to fill a “data gap” when it comes to the inner workings of non-centrally cleared bilateral repurchase agreements (repos) by collecting more data that will ultimately lead to a final rule.
Treasury’s Office of Financial Research (OFR) said in a blog post it has already launched a data collection pilot program with nine institutions that is “designed to prepare industry participants and the OFR for a permanent data collection under a Final Rule, which will capture data on an ongoing basis across all market participants.”
The OFR said the new initiative is the result of “years” of calls by regulators for more insight and transparency into the non-centrally cleared bilateral segment of the repo market.
According to the OFR, the transactions, which are conducted between two firms without the involvement of a central counterparty or custodian, unlike a typical repo where a bank or other custodian may hold the securities in the transaction – “has been a particular blind spot for regulators.”
“Unlike other repo segments where information and data are regularly published, the wholly bilateral nature of these transactions means there is no central source of data on this segment of the repo market,” the OFR stated in its online posting.
‘Blind Spots’
Additionally, the OFR said its research has revealed what it said are blind spots in repo markets that have become more acute with recent events of repo market disruptions in September 2019 and March 2020.
“Expanding visibility into the non-centrally cleared bilateral repo market will be a critical step toward filling this blind spot,” the OFR stated.
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