Global standards to identify parties in financial trades should be in place by March next year, the Financial Stability Board said today.
“This system would be a building block for many financial stability and regulatory objectives, and it would deliver substantial benefits to financial firms,” FSB Chairman Mark Carney said in an e-mailed statement.
The lack of global standard practices for capturing data prevents financial institutions from producing timely and accurate assessments of their risk management, Bank of England official Andrew Haldane said in a speech in March. He said Lehman Brothers Holdings Inc. mistakenly excluded a $6 billion real-estate exposure in reports to its board months before its collapse.
The FSB, based in Basel, Switzerland brings together global regulators and central bankers. It proposed a system for identifying financial counterparties in transactions which would include a 20-character alphanumeric code and the official name and address of the legal entity involved.
The March 2013 implementation date is “ambitious,” the FSB said in its report, and “will require high level political support and strong engagement and co-operation with a wide range of private sector stakeholders.”
The FSB proposed a three-tiered system, consisting of a central oversight committee, an organization to develop detailed standards and a network of national bodies to implement the rules.
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