February 12, 2015

To the Financial Stability Board
Japanese Bankers Association

Comments on the Consultative Document “Standards and Processes for GlobalSecurities Financing Data Collection and Aggregation”
published by the Financial Stability Board
We, the Japanese Bankers Association , would like to express our gratitude forthis opportunity to comment on the Consultative Document Standards andProcesses for Global Securities Financing Data Collection and Aggregation
published by the Financial Stability Board on November 13,2014.
We respectfully expect that the comments in attached paper will contribute toyour further discussion on this issue.

Comments on the Consultative Document "Standards and Processes for Global Securities Financing Data Collection and Aggregation"
Consultative questions

Comments

Q2-1. Does the proposed definition of repos provide a

It is our concern, as a data reporter, that data collection processes necessary to fully implement
practical basis for the collection of comparable data
the proposed standards will not be in place at the initial stage of the implementation. FSB isacross jurisdictions as well as the production ofrequested to implement the standards in a phase-in approach; more specifically first set thecomprehensive and meaningful global aggregates?
pilot and observation periods for currently-available data, and then analyze and verify
collected data and work on additional considerations.
It should be noted that Japanese commercial banks mainly engage in transactions with theircustomers or transactions based on their own actual demand; and, unlike investment banks, do
not conduct speculative activity that uses leverage. Further, the interconnectedness during
financial crisis differs between commercial banking and investment banking. Given this, FSB isrequested to consider possible measures for increasing the reporting frequency of transactions
for speculative purposes while decreasing the reporting frequency of transactions based on
actual demand.
Q2-2. In a later stage, a list of transactions that are
In developing countries, transactions that can be deemed as economically equivalent to repos
economically equivalent to repos may be added to the exist and need to be included in the reporting framework. From a perspective of competition inreporting framework (see also Section 6 for details).
the Asia region, in addition to Japan, other markets, such as Hong Kong, Singapore and other
Which economically equivalent transactions would you FSB member jurisdictions, should also participate in this initiative. For example, Indonesia's
suggest for future inclusion? Please provide a definition MiniRepo transactions are equivalent to repo transactions and are an important funding toolof such transactions and explain the rationale forfor local financial institutions.
inclusion.
In Japan and other developed countries where repos are clearly (or can be easily) distinguishedfrom similar transactions, there is no similar transaction to be added to the framework at thismoment.
Q2-3. Are the proposed definitions and level of granularity of (Table 3)

the data elements described in Tables 2 to 4 appropriate (i) With regard to those transactions whose contract template does not exist, such as sell/buy
for a consistent collection of data on repo markets at the back and buy/sell back transactions, inconsistency may arise in the data collection process. If,national/regional level and for aggregation at thetherefore, reporting is required, it needs to be assessed whether overseas entities outside Japan
global level? In particular, are the detailed breakdown will be capable of fully complying with the reporting requirements. Further, FSB is requestedof major currencies (in Table 2), sector of the reporting to clarify interpretations through providing guidelines or by other means.
entity and counterparty as well as bucketing for repo(ii) FSB's proposed sector classification is considered to be too granular. Given this, FSB israte (in Table 3), collateral residual maturity, haircut
requested to assess the necessity of or to reduce the classifications as described below:
and collateral type (in Table 4) appropriate? If not,please specify which definitions or classifications of(Table 3, 4)
data element(s) require modification, why the(iii)The proposed classifications related to the sector of the reporting entity (3.3, 4.3) andmodification is necessary, and the alternative
counterparty (3.6, 4.6) are difficult to apply. Particularly, it is considered unreasonable that thedefinitions/classifications.
level of granularity of the classification for trusts and funds (e.g. Pension Funds, MMFs andREITs) is relatively higher than other businesses, given that investor information is notdisclosed for confidentiality reasons when the transactions are executed through such trustsand funds.
FSB is requested to consider applying more general classifications, for example, Trust andCustodian.
(Table 4)(iv) Data related to eligible collateral (Collateral quality) and transactions involving a tri-party
agent are not processed by systems, and thus would need to be processed manually, giving
rise to considerable regulatory burden. Therefore, FSB is requested to exclude these data
elements from the reporting framework at the initial stage.
(v)Given that it is required under the contract that bonds be returned by the same type of
instruments in the same amount, there is no economic benefit in capturing the movement ofindividual collateral. In order to capture the financial stability risk caused by the re-use ofcollateral, FSB's proposals need to be reconsidered by taking into account such characteristics
of repos and securities lending/borrowing transactions.
(vi) In the case of repo transactions entered into with an intermediary which acts as an agent of
the final investor, information on such final investor is unavailable. Even if it is available, itwould be difficult to report such information for confidentiality reasons.

Q2-4. Do you see any practical difficulties in reporting thetotal market value of collateral that has been re-used?
Do you have any suggestion for addressing suchdifficulties?

Q2-5. Do the classifications provided for “market segment –trading” (in Table 3) and “market segment – clearing”(in Table 3 and 4) appropriately reflect relevant
structural features of the repo markets? Are there
additional structural features of repo markets thatshould be considered?
Q2-6. Are there additional repo data elements that should beincluded in the FSB global securities financing datacollection and aggregation for financial stability
purposes? Please describe such additional data
elements, providing definitions and the rationale for
their inclusion.

Given that it is required under the contract that bonds be returned by the same type of
instruments in the same amount, there is no economic benefit in capturing the movement ofindividual collateral. In order to capture the financial stability risk caused by the re-use ofcollateral, FSB's proposals need to be reconsidered by taking into account such characteristics
of repos and securities lending/borrowing transactions.
The "transactions traded with the intermediation of an agent" classification provided for in"market segment – trading" is only one of processes for executing a transaction, and thus isconsidered as not an important data element.
The "transactions cleared" classification provided for in "market segment – clearing" isconsidered as an important data element from counterparty's perspectives.
(Same as our comment for Q2-1) A high level of granularity is proposed for data collection in
the Consultative Document. It is our concern, as a data reporter, that data collection processes
necessary to fully implement the proposed standards will not be in place at the initial stage ofthe implementation. FSB is requested to implement the standards in a phase-in approach; more
specifically first set the pilot and observation periods for currently-available data, and thenanalyze and verify collected data and work on additional considerations.

Comments on the Consultative Document "Standards and Processes for Global Securities Financing Data Collection and Aggregation"
Consultative questions
Q2-7. Does the proposed definition of securities lending

Comments(Same as our comment for Q2-1)

provide practical basis for the collection of comparabledata across jurisdictions as well as the production ofcomprehensive and meaningful global aggregates?
Q2-8. In a later stage, a list of transactions that are

No applicable transaction

economically equivalent to securities lending may be
added to the reporting framework (see also Section 6
for details). Which economically equivalenttransactions would you suggest for future inclusion?
Please provide a definition of such transactions andexplain the rationale for inclusion.
Q2-9.

For securities lending, do you think that an additional
table with flow data would add insights into theoperations of securities financing markets and assist
regulators in their financial stability monitoring?

The flow data collection requirements will significantly increase data providers' burden.
Market movements could be captured through fixed point observation, etc. For example,
unlike repos, most of which are transacted over a short-term period, the term of many
securities lending covers a longer period and thus actual conditions of such securities lending
could be captured through stock data.

Q2-10. Are the proposed definitions and level of granularity of (Table 5)data elements as described in Tables 5 to 6 appropriate ○ 5.3 and 5.6
for consistent collection of data on securities lending
See our comment for Q2-3.
markets at the national/regional level and for
aggregation at the global level? In particular, are thedetailed breakdown of major currencies (in Table 2),
sector of the reporting entity and counterparty as wellas bucketing for securities lending fees or rebate rates(in Table 5), residual maturity (in Table 5), collateralresidual maturity and collateral type (in Table 6)
appropriate? If not, please specify which definitions orclassifications of data element(s) require modification,
why the modification is necessary, and the alternative
definitions/classifications.
Q2-11. Do you foresee any practical difficulties in reporting the Given that it is required under the contract that bonds be returned by the same type of

total market value of collateral that has been re-used or instruments in the same amount, there is no economic benefit in capturing the movement ofcash collateral reinvested? Do you have any suggestion individual collateral. In order to capture the financial stability risk caused by the re-use offor addressing such difficulties?
collateral or the reinvestment of cash collateral, FSB's proposals need to be reconsidered bytaking into account such characteristics of repos and securities lending/borrowing
transactions.
Q2-12. Do the classifications provided for “market segment –trading” (in Table 5) and “market segment – clearing”(in Table 5 and 6) appropriately reflect relevant
structural features of the securities lending markets?
Are there additional structural features of securities
lending markets that should be considered?
Q2-13. Are there additional securities lending data elements(Same as our comment for Q2-5) Whether transactions are traded with the intermediation of anagent is considered as not so important.
The "transactions cleared" classification is considered as an important data element fromcounterparty's perspectives.

No applicable transactionthat should be included in the FSB global securities
financing data collection and aggregation for financial
stability purposes? Please describe such additional dataelements, providing definitions and the rationale for
their inclusion.
Q2-14. Does the proposed definition of margin lending

No applicable transactionprovide practical basis for the collection of comparable
data across jurisdictions as well as the production ofcomprehensive and meaningful global aggregates?
Q2-15. In a later stage, a list of transactions that areeconomically equivalent to margin lending may be
added to the reporting framework (see also Section 6for details). Which economically equivalenttransactions would you suggest for future inclusion?
Please provide a definition of such transactions andexplain the rationale for inclusion.
Q2-16. Are the proposed definitions of data elements as
described in Tables 7 to 9 appropriate for consistentcollection of data on margin lending at thenational/regional level and for aggregation at theglobal level? In particular, does the collection of thedata elements in table 9, which represents a specificrequirement for margin lending, provide relevant
information for financial stability purposes? Do you
foresee any particular difficulties to reporting therequired data elements at the national/regional level?

No applicable transaction

No applicable transaction

Comments on the Consultative Document "Standards and Processes for Global Securities Financing Data Collection and Aggregation"
Consultative questions
Q2-17. Are the detailed breakdown of major currencies (inComments
No applicable transaction

Table 2), sector of the client and bucketing for loan rates(in Table 7), collateral type and bucketing for margin
requirements (in Table 8) and funding sources (in Table9) appropriate? If not, please specify which definitions
or classifications of data element(s) requiremodification, why the modification is necessary, andthe alternative definitions/classifications.
Q2-18. Is the collection of the data on the customers’ short

No applicable transaction

position, in addition to the value of outstanding loans,a necessary metric for assessing the overall clients’
exposures and for financial stability purposes? Do you
foresee any practical difficulties to report this dataelement at the national/regional level?
Q2-19. Are there additional data elements in relation toNo applicable transaction

margin lending that should be included in the FSB
global securities financing data collection andaggregation for financial stability purposes? Please
describe such additional data elements, providing
definitions and the rationale for their inclusion.
Q3-1.

Is the data architecture described in Section 3 adequate (Same as our comment for Q2-1) A high level of granularity is proposed for data collection into support the global securities financing data
the Consultative Document. It is our concern, as a data reporter, that data collection processes
collection and aggregation? Are there other relevant
necessary to fully implement the proposed standards will not be in place at the initial stage ofissues to be considered?
the implementation. FSB is requested to implement the standards in a phase-in approach; more
specifically first set the pilot and observation periods for currently-available data, and thenanalyze and verify collected data and work on additional considerations.

Q3-2.

Do you have any other practical suggestions to reduce ■ As being considered by TR in Europe, it would be more appropriate in Japan if CCPs or
any additional reporting burden and improve theother similar organizations assume the role of data collection; because it would be suitable forconsistency of the global data collection?
capturing outstanding balances at the market level and it would ensure data accuracy,
consistency and timeliness and enable more prompt and flexible responses to requests fromfinancial authorities and FSB, as opposed to requiring a number of market participants toindividually work on data collection.
If however the primary purpose of data collection is for financial authorities or FSB to identify
risks and their sources in times of financial crisis or to capture how the crisis transmits, itwould be appropriate for market participants to individually work on data collection.
In either way, the purposes of data collection should be clarified first and then the datacollection approach that most suits those purposes should be selected. FSB is requested toconsider this matter sufficiently so that data collection does not result in a simple data
aggregation process that does not produce any particular monitoring effect.
■ FSB has requested to comply with various reporting requirements. However different
formats and data definitions across reporting requirements may force private-sector financial
institutions to double or triple their investments in systems and human resources to comply
with respective FSB reporting requirements. In order to avoid such inefficiency, it is requested
to further clarify the FSB's reporting requirements in a systematic manner.

Q3-3. Do the proposed measures for minimising double-counting at the global level constitute a practicalsolution to the problem?

Q3-4. Are there any confidentiality issues that you consider

relevant for the global securities financing datacollection other than those explained above? If so,please provide any practical suggestions to overcome
such issues?
Q4-1.

If the purpose of the data collection is to monitor excessive build-up of leverage by repos, itwould be reasonable to impose the reporting requirements on borrowers because the demand
for leverage generally exists on the borrower side. Requiring both sides of the repo transaction
to report the data would be an inefficient approach.
It is requested that FSB manage information collected (e.g. names of individual banks andsecurity) carefully, giving due regard to confidentiality.

Do the proposed recommendations as set out above
We consider that FSB's proposed recommendations will adequately support authorities.
adequately support the authorities in deriving
meaningful global aggregate data? Are there any otherimportant considerations that should be included?

Q6-1. Are there any relevant practical issue related to thepossible extension of the list of data elements to beconsidered as set out in Section 6?

The proposed list of possible extension of data elements includes (i) economically equivalenttransactions and (ii) data needed to calculate metrics of collateral velocity and (iii) data related
to the implementation of the regulatory framework for haircuts. The data collection of theseelements is mainly intended to monitor the trends of repos and securities financing
transactions and their impact on the financial system. It is therefore considered as more
appropriate to collect these data, for example, semi-annually or annually, instead of monthly
aggregation similarly to other elements. Further, it would result in double supervisory
reporting of economically equivalent transactions, when combined with the reporting required
for OTC derivatives. Such double reporting would not produce any significant benefit forsupervisors. In any case, these elements should be monitored through periodic market review.

Comments on the Consultative Document "Standards and Processes for Global Securities Financing Data Collection and Aggregation"
Consultative questionsQ6-2. Are there other data elements in relation to securities

Comments-

financing transactions that you think the FSB should
consider for financial stablity purposes?
Q6-3. Do you agree that a pilot exercise should be conducted-

before launching the new reporting framework? If so,
are there any practical suggestions that the FSB andnational/regional authorities should consider when
preparing the pilot exercise?
Q6-4. In your view, what level of aggregation and frequency

for the publication of the globally aggregated data onsecurities financing transactions by the FSB would beuseful? Please provide separate answers for repo,securities lending and margin lending if necessary.

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