From the Director

The Office of Financial Research (OFR) is one of the offices involved in this effort and collaborates with other standards-setting organizations on the development, adoption, and use of data standards. As part of this initiative, OFR works with the International Organization for Standardization (ISO) and the Accredited Standards Committee X9 Inc. (X9) to develop financial-data standards for digital identities, digital assets, and distributed-ledger technologies.

A new brief the OFR published today documents basic facts about volumes, rates, counterparty types, collateral, and haircuts in the relatively opaque noncentrally cleared bilateral repo market.

In a presentation last week to the Financial Stability Oversight Council, the OFR discussed the next phase of a critical initiative: providing more transparency into the repurchase agreement market.

Following my confirmation in 2019, our Office of Financial Research (OFR) initiated an all staff effort to fulfill our Dodd-Frank responsibilities. While our mission is simple, it is incredibly important. That is, further financial stability through high-quality financial data, standards, and analysis, principally in support of the Financial Stability Oversight Council (FSOC) and its members.

Reviewing my first year as Director of the Office of Financial Research (OFR or Office), I am proud of the consequential work that our team has accomplished. However, we are not done yet and I am confident that our path forward will continue to find OFR leading the development and advancement of research insights and data services for the Financial Stability Oversight Council (FSOC).

Since the last financial crisis, policymakers have sought to impose tougher standards on any bank whose failure would pose the greatest risk to financial stability. Where should the line be drawn in identifying banks to subject to those standards?

The Dodd-Frank Act directs the OFR to monitor risks to the nation’s financial stability and develop tools for risk measurement and monitoring. To help fulfill that mandate, the OFR has developed two new tools: the Financial System Vulnerabilities Monitor (FSVM) and the Financial Stress Index (FSI).

Cybersecurity breaches can cause real harm to the operations and customers of financial companies. In a new paper in the OFR Viewpoint Series, the OFR describes how a cyber incident could also threaten financial stability through three channels: (1) lack of substitutability, (2) loss of confidence, and (3) loss of data integrity.

The global Legal Entity Identifier system is a cornerstone for financial data standards that offers great benefits to industry and government.

The financial crisis of 2007-09 now seems distant, and the chance of a future financial disruption seems remote. So it’s not surprising that some question why we need continued vigilance over financial stability. But, if nothing else, we learned in the crisis that vigilance is vital.

Data are the lifeblood of finance, and the volume of financial data is staggering. On a routine day, close to $15 trillion in payments settle across the world. Regulators need data to oversee firms and markets, but data collection is not always smooth or efficient. This inefficient reporting can be costly and undermines quality.

LIBOR is not just an interest rate. It is an interest rate benchmark, or reference rate, one that plays a central role in financial markets and our economy. But there are doubts about LIBOR’s reliability, prompting the Federal Reserve and the Office of Financial Research to work with other agencies and market participants to devise a reliable, widely accepted alternative.

An OFR working paper released today analyzes new data measuring securities lending activity. A securities loan is a transaction in which the lender (a securities owner) temporarily transfers securities to another party (a securities borrower) for compensation.

Well-designed "microdata" can help companies and regulators monitor risks. OFR Deputy Director Con Crowley presented a paper on the topic this week at a European Central Bank conference.

Today, the Office of Financial Research released its first paper in a new Viewpoint Series. This first viewpoint describes best practices for financial regulatory data collections.

The Office of Financial Research released a working paper today intended to serve as a reference guide for the U.S. repurchase agreement, or repo, and securities lending markets. The first such comprehensive reference to these securities financing transactions, it is critically needed.

Today we are launching www.financialresearch.gov, a new website for the Office of Financial Research. Version 1.0 will, at a stroke, create our own place in cyberspace – one where we will make public our work.

In a presentation earlier this week to the Financial Stability Oversight Council, I announced an important initiative of the Office of Financial Research in partnership with the Federal Reserve to fill a key gap in our ability to measure financial activity.

Filling key gaps in financial data, such as through this project, is an essential element of OFR’s mission. The Office was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act to promote financial stability by delivering high-quality financial data, standards, and analysis for the Council and the public.

For the first time ever, approximately 3,500 hedge funds and other private fund advisers will report a broad range of information about their funds to government regulators. A new reporting form, known as Form PF, recently approved by the Securities and Exchange Commission (“SEC”) and Commodity Futures Trading Commission (“CFTC”), will enable regulators to obtain and analyze new information for purposes of monitoring systemic risk.

The adoption of Form PF is a milestone in Wall Street Reform implementation and highlights important progress that has been made in increasing transparency in the financial system and facilitating interagency coordination.