The Mexican transparency standoff: What will you do ‘next time’?

Abstract

Nearly six years on from the launch of the G20 plan for financial services reform, hundreds of thousands of pages of regulation have been written on transparency. As increasingly more regimes are put in place across the G20, the difficulty in meeting the requirements rises: new data fields are required to be sourced, infrastructure needs to be built and complexity arises from each regime’s distinctive ‘flavour’ of requirements. At the same time, even if one argues that firms in theory could meet these disparate and often vague transparency requirements, they have little incentive to invest the vast amounts of resources required because the penalties for not doing so are less burdensome. UK-based firms have been fined a total of £33m over the last six years for transaction reporting failures, less than £5m for risk reporting failures and nothing at all for trade reporting. Meanwhile, regulators, without the quality data with which to analyse the financial system, find their ability to prevent future crises com­promised. Without significant changes in the approach to providing data for systemic risk analytics, the industry will continue to live with an opaque and murky system.