It's all about hiding info. The industry and their "cyber sleupping" defenders are silent on the issue of silence.
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SEC wishlist: Derivatives data with which to pursue derivatives fraud
Posted by Tracy Alloway on Oct 08 10:06.
Here’s an obvious thing that would help the SEC root out fraud in the $54,000 bn credit derivatives market — having access to real-time derivatives data.
But the SEC has apparently been without access to such data, according to the Wednesday congressional testimony of Henry Hu, the regulator’s new head of risk, strategy and financial innovation. From Securities Industry News:
The Securities and Exchange Commission told Congress today to grant regulators “direct access to real-time data” on credit default swaps (CDS) and other derivatives.
The request comes, the agency said, because the lack of such information hampered its efforts to investigate potential fraud and market manipulation in the over-the-counter (OTC) derivatives markets during last fall’s financial crisis.
The SEC’s enforcement actions in investigating market manipulation in OTC derivatives “were seriously complicated by the lack of a mechanism for promptly obtaining critical information — who traded, how much, and when — that is complete and accurate,” said Henry Hu, the director of the SEC’s new division of risk, strategy and financial innovation, in written testimony to the House Financial Services Committee.
Meanwhile, the SEC, it seems, has had to rely on case-by-case calls to the DTCC for its info:
The SEC’s enforcement actions in investigating market manipulation in OTC derivatives “were seriously complicated by the lack of a mechanism for promptly obtaining critical information - who traded, how much, and when - that is complete and accurate,” said Henry Hu, the director of the SEC’s new division of risk, strategy and financial innovation, in written testimony to the House Financial Services Committee.
Hu testified that “data on securities-related OTC derivative transactions were not readily available, and needed to be reconstructed manually.” He asked Congress to expand the SEC’s inspection authority over trade data repositories and clearinghouses for derivatives.
The comments represented a rebuke to industry efforts aimed thus far at making more information on CDS and other OTC derivatives data more readily available.
The main collector of information on CDS contracts has been the Depository Trust and Clearing Corporation (DTCC), which could be required to supply it in real-time to the SEC. DTCC chief spokesman Stuart Goldstein said the clearing corporation has provided the SEC with derivatives data when asked, and “will continue to look for ways to be responsive to their requests as they ask for information.”
You couldn’t make this stuff up.
The full story here (H/T Zero Hedge).
Related links:
Banks (still) making money on derivatives trading, OCC says - FT Alphaville
SEC discovers that financial innovation is risky - FT Alphaville
This entry was posted by Tracy Alloway on Thursday, October 8th, 2009 at 10:06 and is filed under Capital markets. Tagged with CDS, derivatives, DTCC, Markit, sec. |
