WASHINGTON — Regulators must work not only to procure data from banks about risks in the financial system but also find ways to standardize how that data is reported, a top Treasury Department official said Thursday.

Speaking at the third annual conference hosted by the Office of Financial Research and the Financial Stability Oversight Council, Treasury Under Secretary for Domestic Finance Mary Miller said there were still critical areas of the financial system on which regulators lack good data. (The Dodd-Frank Act created the OFR within Treasury to collect data from institutions to guide regulators' systemic risk oversight.)

Miller particularly mentioned information about derivatives, especially those traded over the counter such as credit default swaps, as a piece that policymakers are missing from the financial puzzle.

"Research is central to protecting financial stability, and the simple reality is that you cannot do good research without good data," said Miller. "To gain a better understanding of the financial system and its vulnerabilities, risks, and interconnections, we need to fill in missing pieces of financial data - in other words, fill the gaps."

Miller said the conference was intended to show areas where further data are needed, including "the lack of granular, standardized data from swap and trade repositories." She noted that the financial crisis had proven there were risks tied to large financial institutions trading in derivatives, like those that nearly caused American International Group to fail and required government resources to bail out the firm.

Under Dodd-Frank, derivatives trades by institutions must be reported to "swap data repositories," which regulators hope will bring greater transparency to the derivatives markets. Such new requirements are also expected to help develop better insight into the types and levels of risk exposure across the financial system due to derivatives trading.

"Before the financial crisis, those kinds of derivatives were traded between parties with no central record of who was trading with whom," said Miller. "The size of the market and the exposures within the network of trading connections were hidden from view."

Still, while efforts are underway to improve reporting, Miller said more work needs to be done to ensure that the data being collected will help regulators put the pieces together. She stressed the need for regulators to establish uniform reporting standards to develop a more holistic picture of risks to the financial system.

"The data are fragmented, with many different trade repositories, within and across jurisdictions, collecting different kinds information in different ways, keeping us from putting all that information together to develop a full picture of the market," Miller said.

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