U.S. regulators preparing to monitor markets for systemic risk must establish unique identifiers to help track complex financial transactions, the Federal Deposit Insurance Corp.’s acting chairman said in a Washington speech.
Such a system would enable government overseers “to trace counterparty relationships, which still today are central to the systemic risk we’re dealing with nationally and internationally,” Martin Gruenberg said today at a conference held by the U.S. Treasury Department’s Office of Financial Research and the Financial Stability Oversight Council.
The research office, created by the Dodd-Frank Act as part of an effort to prevent a repeat of the tumult that followed the collapse of Lehman Brothers Holdings Inc. in 2008, is charged with creating a database of financial firms and products. The office is planning to create common Legal Entity Identifiers, unique numbers assigned to each entity.
Gruenberg, whose agency is part of the oversight council and would be responsible for unwinding systemically important firms in the event of a collapse, said there is “an absolutely essential need for improved data” among regulators responsible for monitoring systemic risk.