Global Financial Regulators Issue Progress Report on Counterparty Risk Reporting (with Lofchie Comment)
Senior financial supervisors from ten countries, collectively making up the Senior Supervisors Group ("SSG"), issued a report assessing the progress on measuring and reporting counterparty risk from large and complex financial firms.
The report, Progress Report of Counterparty Data, collected daily global counterparty credit data for reporting firms' largest twenty exposures to each of the three distinct types of counterparties, including banks, non-bank financial institutions and non-bank corporate counterparties. The report found that firms have made improvements in assessing counterparty risk; however, they failed to meet supervisory expectations and industry best practices in a timely, consistent and accurate manner. The SSG highlighted that one area of concern is firms' inability to produce and submit high-quality data to supervisors on a consistent basis. Based on findings from the report, the SSG called on supervisors to further emphasize to regulated entities the significance of reliable, timely and accurate reporting of counterparty exposure.
The report represents a joint effort on the part of supervisory agencies from ten countries: in Canada, the Office of the Superintendent of Financial Institutions; in France, the Prudential Control Authority; in Germany, the Federal Financial Supervisory Authority; in Italy, the Bank of Italy; in Japan, the Financial Services Agency; in the Netherlands, the Netherlands Bank; in Spain, the Bank of Spain; in Switzerland, the Financial Market Supervisory Authority; in the United Kingdom, the Prudential Regulation Authority; and in the United States, the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Board of Governors of the Federal Reserve, and the Federal Reserve Bank of New York.
Lofchie Comment: Although four U.S. financial regulators participated in the study, only the Fed and the FRBNY had their logos included in the circular design of logos on the cover page, with the Fed at eleven o'clock and the FRBNY at four o'clock.