From the Management Team
October 29, 2015
An OFR working paper published today documents that the amount of a key type of short-term borrowing by foreign-owned broker-dealers has declined by about 10 percent at the end of each quarter since July 2008 and rebounded at the beginning of each following quarter.
October 20, 2015
The OFR released a working paper today that reviews the rapidly expanding research on network models of the financial system.
October 7, 2015
An OFR working paper released today illustrates some of the complexities in interpreting the Liquidity Coverage Ratio (LCR), a new standard set by bank regulators after the financial crisis to help ensure banks maintain enough liquid assets to cover their financial obligations during times of stress.
September 16, 2015
Concern has focused recently on the apparent fragility of market liquidity, which refers to the ability to buy and sell securities with a minimal price impact and is essential for markets to operate efficiently. Although liquidity may seem adequate under normal conditions, it seems to disappear abruptly in times of stress.
August 5, 2015
A financial company reference database envisioned by the Dodd-Frank Act has become a reality. The international database is free, frequently updated with new information, and available.
May 7, 2015
The OFR released two working papers today that focus on the potential risks of central clearing of over-the-counter derivative transactions.
May 5, 2015
A recent paper funded by the OFR through its joint grant program with the National Science Foundation offers insights into the impact on the financial system of high-frequency trading, contributes to developing technologies for working with large datasets, and fosters understanding of market liquidity.
February 12, 2015
The OFR released a brief today analyzing new data about the nation’s most systemically important bank holding companies — financial institutions whose failure could pose the greatest threat to the international financial system.
July 3, 2014
The global project to assign unique identifiers to parties in financial transactions has turned a corner, bringing the world closer to mapping connections in the financial system and cutting industry costs for cleaning, aggregating, and reporting data.
In the past week, the global Legal Entity Identifier (LEI) system crossed the threshold to move from a start-up initiative to an operational, steady state.
The defining moment was the inaugural meeting of the Board of Directors of the Global Legal Entity Identifier Foundation on June 26 in Zurich, Switzerland. Under the continued oversight of the LEI Regulatory Oversight Committee (ROC), the Foundation will now begin to assume management of LEI operations across the globe.
January 14, 2014
As global acceptance continues to spread, governance for the Legal Entity Identifier (LEI) system advanced today. The LEI, like a bar code identifier for entities that engage in financial market transactions, promises to be a linchpin for making connections in the massive volumes of financial data that course through the international economy every day.
The Financial Stability Board (FSB), an international coordinating body established by the G-20 to promote global financial stability and regulatory coordination, endorsed today the nomination of 16 directors for the Global LEI Foundation (GLEIF), a key element for governance and a critical step forward.
December 23, 2013
This past year, the Office of Financial Research (OFR or Office) has advanced substantive work to achieve its mission, building on its progress since being established by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The OFR, led by Director Richard Berner, is ramping up its services to the Financial Stability Oversight Council (Council), Council member agencies, and the public by working to improve the quality and scope of financial data available to policymakers and to conduct and foster sophisticated analysis of the financial system.
Last week, the OFR submitted its 2013 Annual Report to Congress, fulfilling a requirement to annually assess the state of the United States financial system and analyze threats to U.S. financial stability. The report describes a prototype Financial Stability Monitor, a comprehensive new tool developed by the OFR for tracking threats and the interplay among them.
July 8, 2013
This is an exciting time for those of us at the Treasury’s Office of Financial Research and others around the world who have been working to establish a global system for precisely identifying parties to financial transactions.
The Legal Entity Identifier, or LEI, is like a bar codea unique ID for companies participating in global financial markets. The need for an LEI system has long been recognized. However, the recent financial crisis exposed the critical nature of that need, when government regulators and market participants were unable to quickly assess exposures to failing firms or the network of interconnections among financial companies and markets.
December 21, 2012
How might the dynamics of a flock of birds in flight, a group of drivers in a traffic jam, or a panicked crowd of stampeding people inform our analysis of threats to financial stability?
In the third paper of our Working Paper Series - Using Agent-Based Models for Analyzing Threats to Financial Stability - the staff of the Office of Financial Research (OFR) explores these questions as we seek better ways to monitor risk to the financial system.
June 1, 2012
The Financial Stability Board (FSB), which brings together global financial regulators and policymakers, reached a critical milestone this week in the initiative to establish a worldwide standard for uniquely identifying parties to financial transactions. This linchpin for financial data, known as the Legal Entity Identifier (LEI), will allow financial companies and financial regulators to better understand true exposures and counterparty risks across the global financial system.
During the financial crisis neither institutions nor regulators were able to accurately assess direct or indirect global exposures to troubled companies, hampering efforts to manage, and to respond to, risks. A major reason was the absence of a consistent way of identifying counterparties in the numerous and disparate databases that financial firms and regulators maintain for tracking global financial instruments and positions. By filling this critical gap, the LEI will be a valuable tool for identifying risks associated with these exposures and helping to prevent such critical failures in the future.
March 26, 2012
A key part of the mission of the Office of Financial Research (OFR) is to promote best practices in financial risk management. Today, in the second paper of its Working Paper Series, the OFR issued a paper that provides a broad assessment of risk management practices and how risk management can be improved: Forging Best Practices in Risk Management.
The paper approaches risk management from three perspectives: risk measurement by individual firms, governance and incentives, and systemic concerns. Although the paper separately evaluates each approach, it also includes a discussion on the importance of considering these three dimensions of best practices in risk management as interrelated. The paper concludes by defining important areas for continued research and for modifying the role of risk management in financial firms’ business decisions.
January 19, 2012
Key international regulators and policymakers have taken another step forward in the global initiative to increase transparency in financial transactions. The Financial Stability Board (FSB) recently announced progress in making the global financial system more transparent and less vulnerable to excessive risk-taking through the creation of a Legal Entity Identifier (LEI) Expert Group. The formation of the LEI Expert Group will build on the work of Treasury’s Office of Financial Research (OFR) and its global counterparts in advancing the LEI initiative. The OFR has played an active role to help build international consensus and facilitate adoption of a global LEI standard and we are excited to support the Expert Group in its efforts.
January 11, 2012
The Dodd-Frank Act created the Office of Financial Research (OFR) because policymakers and the public need better data and analysis to help them assess and respond to threats to financial stability. With that goal in mind, the OFR is launching a Working Paper Series that will make available the OFR’s work on the analytics and measurement of such threats in depth. Today, we release our first Working Paper – A Survey of Systemic Risk Analytics, by Dimitrios Bisias (MIT), Mark Flood (OFR), Andrew W. Lo (MIT), and Stavros Valavanis (MIT).