OFR_2016_Financial-Stability-Report

Better Regulatory Sharing Needed
The ability to share data is constrained by legal concerns,
difficulty in finding information on what data exist and
who owns them, and the technical infrastructure needed
to enable secure sharing.
A lack of timely data sharing limited regulators’ ability
to understand the risks building up before the financial
crisis and to respond to rapidly changing events during
the crisis. Data sharing is also essential for system-wide
analysis that crosses markets and institutions overseen by
different regulators.
The December 2015 removal of the Dodd-Frank Act indemnification
requirements from the Commodity Exchange
Act and Securities Exchange Act has reduced the number
of barriers to regulatory information sharing for certain
derivatives data, but others remain. For example, regulators
must successfully negotiate data-sharing memoranda
of understanding to address confidentiality and the legal,
policy, and operational constraints under which each regulator
operates.
The value of data sharing was demonstrated when regulators
began analyzing an unprecedented surge of volatility
in the U.S. Treasury market on Oct. 15, 2014. The analysis
required collaboration among five U.S. regulators overseeing
different parts of the market. A lack of comprehensive
market data and initial challenges in sharing existing
data across regulators slowed that analysis.
Regulators took nine months to publish their final report
on the event. With better technical infrastructure, appropriate
agreements, and established practices for collaboration
and data sharing, regulators could have more
quickly assessed and addressed any underlying vulnerabilities.
As these regulators develop new collections to
fill data gaps, they also are developing an information
sharing agreement (see Treasury, Board of Governors,
FRBNY, SEC, and CFTC, 2015).
needs that could be addressed by member agencies to
ease sharing: “Data sharing improvements may include
developing stronger data sharing agreements, collecting
common data using standard methodologies, developing
and linking together data inventories [metadata catalogs],
and promoting standard criteria, protocols, and appropriately
strong security controls to streamline secure sharing
of datasets.” In support of the FSOC, the OFR is facilitating
a working group to review data sharing agreements
to identify areas that can be standardized.
The OFR also is enhancing its own metadata catalog
to add information and make nonconfidential portions
viewable by other regulators and the public. A metadata
catalog lists information about financial datasets, such as
the names and definitions of data elements, who owns a
dataset, and where it resides. The OFR plans to link the
catalog to other agencies’ metadata catalogs. A reliable
source of reference information such as linked metadata
catalogs will support sharing.
A lack of timely data sharing limited
regulators’ ability to understand the
risks building up before the financial
crisis and to respond to rapidly
changing events during the crisis.
The FSOC stresses the importance of sharing data. The
2016 FSOC annual report emphasized basic operational
82 2016 | OFR Financial Stability Report