BIS publishes data disclosure standards for CCPs

The Bank for International Settlements (BIS) is pushing for central counterparties (CCPs) to disclose a host of quantitative data on their risks and requirements on a quarterly basis.

The BIS Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (Iosco) have created a "disclosure matrix" to guide what data CCPs should publicly disclose and when.

The matrix was released for public consultation earlier this week. It includes information relating to CCPs credit and liquidity risk, collateral stocks and margin requirements, and links with other financial market infrastructures.

There are plenty of features that are open for consultation – in particular the organisations are looking for feedback on how CCPs can present information in a meaningful way "while avoiding a disproportionate reporting burden".

Daniela Russo, the director-general of payments and market infrastructure at the European Central Bank (ECB) acknowledged the importance of timely data disclosure in an interview with Custody Risk last month.

She pointed to concerns in Europe's banks that CCPs were "providing insufficient data" on their risks – and said the idea of asking CCPs to propose quantitative data was "largely supported by the market".

CPSS and Iosco distinguish between two types of data that CCPs should disclose: qualitative data that needs updating "relatively infrequently" and quantitative data that needs updating on a more regular basis.

The organisations addressed the disclosure of qualitative data in a separate framework, published in December 2012, which they stressed should be "taken together" with the new, quantitative, standards.

Both publications, they said, are intended to help public authorities and market participants form a "clear, accurate and full" understanding of the risks associated with any given CCP.

These stakeholders should be able to "understand and assess" this risk of participating in a CCP either directly or indirectly, and to compare each CCPs risk controls with their peers – including their ability to withstand potential losses.

Russo said there is a "common understanding" that the more CCPs are able to publicly disclose information "the less they will need to provide on a bilateral basis additional information in order to allow banks and their customers to manage their risks".

CPSS and Iosco also revealed plans to develop quantitative disclosure standards for other financial market infrastructures, including payments systems, securities settlement systems, central securities depositories and trade repositories.