The US Federal Reserve Board has established a private sector working group to recommend steps to mitigate operational risks in the clearance and settlement of US government securities.The working group will explore ways the two major clearing banks, JP Morgan Chase and the Bank of New York, could substitute for each other if the services of either were interrupted or terminated. A final report will be released before the end of 2003.
Michael Urkowitz, senior adviser to Deloitte Consulting, will chair the working group, which will include representatives of the two major clearing banks, the Government Securities Clearing Corporation, securities dealers, inter-dealer brokers, custodian banks, the Bond Market Association and the US-based Investment Company Institute. Staff of the Federal Reserve, the Securities and Exchange Commission (SEC) and the Department of the Treasury will participate in the working group as observers and technical advisers.
In May, the SEC and the Fed issued a white paper on structural change in the settlement of government securities. “The white paper expressed concerns about operational, financial and structural vulnerabilities associated with the status quo, in which all of the most active market participants are critically dependent on one of two clearing banks for settlement of their trades and financing of their positions,” the Fed said.
Comments resulting from the white paper urged the authorities to concentrate on mitigating risks within the current structure, rather than considering structural change, which in turn led to the formation of the working group.
More on Structured Products
China, environment and risk factors among top themes
Societe Generale takes top spot at Hong Kong awards ceremony
Regulatory ruling confirms what was expected of private placement regime
Former SG Asia sales head Nicolas Reille joins Natixis in Hong Kong
Sign up for Risk.net email alerts
Nominated for two technology awards
Nominated for post trade technology award
Sponsored webinar: Collateral and counterparty tracking
Isda directors warn on fragmentation, access and liquidity - but expect problems to pass
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.