CFA Institute Centre for Financial Market Integrity propose new risk management code
NEW YORK - The CFA Institute Centre for Financial Market Integrity has published a proposed code of professional conduct for asset managers outlining clear risk management requirements. Consultation on the document ends January 15, 2009. The institute is the global policy authority on ethics in the global capital markets.
The proposal code establishes a more detailed risk management process that identifies monitors and analyses the risk position and exposure of an asset manager. The guidance also addresses many of the risk management concerns highlighted by the current market crisis. The types of risks faced by managers include market, credit, liquidity, counterparty and operational risks as well as style drift. The code makes the point that risk management that is objective and independent of the portfolio management process is imperative to understanding and controlling these types of risk.
The proposed code suggests establishing a risk management process that identifies, monitors, and analyses the risk position of manager portfolios, including the sources, nature and degree of risk exposure for individual securities and the total portfolio. It was developed in co-operation with the global 13-member CFA Institute Standards of Practice Council.
"The code is comprehensive set of professional conduct standards designed for use by any asset manager, including the hedge fund industry," said Kurt Schacht, managing director of the CFA Institute Centre.
"We think hedge funds globally can benefit greatly from this code and its rigorous focus on ethical and professional conduct. While there are several best practice templates available to the industry, the AMC is the only one focused on client loyalty and requires full adoption to claim compliance. We encourage hedge fund investors everywhere to require their mangers to adopt the AMC," Schacht commented.
There are no formal procedures for adopting the code.
More on Operational Risk
New systems and processes necessary to prevent illicit money flows
Due diligence should have raised investors’ suspicions
Firms could be prosecuted for failing to prevent economic crime
In 2013 SEC increased formal orders of investigations by 20%
Sign up for Risk.net email alerts
Oxford professor David Vines argues that the carrot is as important as the stick
Sponsored webinar: IBM
Watch highlights of this year's London conference
Operational risk and the challenges of defining and dealing with conduct risk
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.