New York Fed head urges data transparency for financial markets

The president of the U.S. Federal Reserve Bank of New York highlighted the need for transparency and clarity Thursday in data for financial markets.

"To be clear, having access to an abundance of data is a wonderful problem to have. Think about the plethora of data you can pull from a terminal and the endless ways to use it," John Williams said in a speech at the 2023 U.S. Treasury Market Conference in New York City. "And while we assume that most data are 'good,' there are, unfortunately, 'bad' data, too."

Williams said it is important to prioritize transparency and clarity in data, especially in the age of artificial intelligence when the sources of data are harder to trace.

"We have also increased transparency with Trade Reporting and Compliance Engine (TRACE) data. This initiative, which was started in 2017 to fill in the gaps on Treasury transaction data, is a significant component of a broader interagency effort to enhance understanding and transparency of the Treasury securities market. This has proven valuable as it has allowed the official sector to closely track developments in the cash Treasury market," he noted.

The New York Fed head said transparency and information on the sources of data are often barely sufficient, and added that some analysts have trumpeted the "market's estimate" of the probability of certain high inflation outcomes using data on the prices of inflation options during the recent high inflation environment.