Recent Issue Headlines
Vol. 1, No. 3 (Mar. 17, 2008) Print This Issue
- The SEC and CFTC entered into a mutual cooperation agreement that promises to encourage a stronger working relationship between the two key regulatory agencies with jurisdiction over structured financial products.
- Practitioners should expect to see more coordination and solidarity from both the SEC and CFTC in reviews and investigations of new financial products.
- Regulatory consolidation is consistent with trend of industry cross-border consolidation.
All Roads Lead to the Chief Compliance Officer: a Report from the Recent Institutional Investor Events Chief Compliance Officer Forum
- Detailed coverage of Institutional Investor Events’ Third Annual Chief Compliance Officer Forum.
- SEC focusing on, with respect to hedge funds: valuation, disclosure, insider trading and preferential redemption terms.
- SEC has recommended forensic tests that hedge fund advisers can perform to help ensure the integrity of valuations of portfolio securities.
- FASB 157 specifies factors for hedge fund advisers to consider when measuring fair values.
The President’s Working Group on Financial Markets Issues Policy Statement on Financial Market Developments
- President’s Working Group on Financial Markets released a set of comprehensive recommendations designed to stabilize the current turmoil in the financial markets, including the following key recommendations:
- Reform of the mortgage origination process.
- Improve investors’ contribution to market discipline.
- Reform the credit rating processes and practices regarding structured credit and other securitized credit products.
- Strengthen global financial institutions’ risk management practices.
- Enhance prudential regulatory policies.
- Enhance the OTC derivatives market infrastructure.
Senior Supervisors Group Issues Observations on Risk Management Practices During the Recent Market Turbulence
- According to the Senior Supervisors Group, firms that dealt most successfully with the market turmoil of late 2007 demonstrated:
- Better flow of information across the firm and more rigorous internal valuation mechanisms.
- Effective management of funding liquidity, capital and the balance sheet.
- Informative and responsive risk management practices.
- In particular, three business lines where varying practices differentiated performance in response to the credit crunch were: CDO structuring, trading and warehousing; leveraged financing loans; and conduit and SIV businesses.