May 2023 Remarks by James Martin to the Financial Research Advisory Committee

As prepared for delivery

Welcome to the Financial Research Advisory Committee’s 21st meeting. I’m James Martin, Acting Director of the Office of Financial Research.

I’d like to extend a warm welcome to our committee members, both here with me in New York and online. I’m grateful that you continue to take time from your demanding schedules to meet with us and willingly share your advice.

Since its inception, this committee has weighed in on a variety of topics and offered OFR invaluable insights into how to conduct its financial-stability monitoring and analysis.

When we met in April 2022, OFR staff presented our plan to collect data on noncentrally cleared bilateral repo transactions. You provided additional insight into the lack of transparency in this market, and in January 2023, we proposed a rule to fill this data gap. Comments were due in March, and we are in the process of evaluating them in preparation for drafting a final rule.

During our most recent meeting, in November 2022, Francisco Ilabaca from our research team presented preliminary findings from his analysis of the digital-assets market, based on data reported by crypto intermediaries. The committee suggested that he report on the size and scope of digital-asset firms in this dataset and develop an assessment of data gaps in this regulatory collection. As you will see in a few weeks, when we publish Francisco’s piece, your advice was well received.

Today’s meeting provides more opportunities for the OFR to draw on your expertise when we discuss our monitoring tools and ways to look at risk from both banks and nonbanks.

Now, let me give you a quick overview of today’s agenda. In just a minute, I will ask FRAC Chairman Randy Kroszner to make introductory remarks and invite all committee members to introduce themselves. I will then turn the floor over to FSOC’s Deputy Assistant Secretary, Sandra Lee, to welcome the committee and provide an overview of the Council’s proposed guidance on nonbank-financial-company designations. As always, thank you, Sandra, for joining our meeting and for discussing this important topic. Risk from nonbanks is a key OFR workstream that we will hear the committee’s thoughts on later today.

Our first presentation will be by the OFR. Con Crowley, the Deputy Director of OFR’s Data Center, will discuss the OFR’s public-facing financial stability monitoring tools. If you have any suggestions on where you think the OFR could provide more of these to financial industry participants and the general public to increase market

transparency and facilitate research on the financial system, please bring them up during Con’s presentation.

Following that, we will have two discussions led by FRAC members. John Ryding will lead a discussion on risks from the banking sector, and Lawrence Goodman will lead a discussion on risks from nonbank financial institutions.

We’ll wrap up by brainstorming topics for our next meeting, and we’ll plan to adjourn by 1 p.m.

Questions and comments will be limited to committee members only. Now that we are in a hybrid meeting, for those here with me, we will use the FRAC tradition of turning up your tent cards to indicate you would like to speak. Those on Zoom should use the raise hand feature. I want to remind everyone that this meeting is public and on the record. I’d like to thank you all for your time and commitment to the OFR, and I look forward to a productive discussion.

And now, I’m pleased to introduce Randy Kroszner, our committee Chairman.