We read with interest the Systemic Risk Information Study issued this month by the Securities Industry and Financial Markets Association (SIFMA) and business consulting firm Deloitte & Touche. In fact, we hear a familiar tune behind its findings for creating a systemic risk regulator: data standardization and greater transparency are needed, including non-regulated entities. Still, for the purposes of regulation, we agree that “relying on . . . massive quantities of granular information may provide a false comfort to a systemic risk regulator, who should consider a more holistic view, such as of overall trends, major concentrations and imbalances, and significant interconnections between firms. A data-centric approach poses the risk that the systemic risk regulator could ‘miss the forest for the trees.’”
http://www.sifma.org/regulatory/pdf/SIFMA_Systemic_Risk_Information_Study_June_2010.pdf