
Forum codifies Chinese Walls in credit trading
The point of focus is so-called ‘material non-public information’ - information that is not available to the public and that can be considered important in making investment decisions. Some credit default protection sellers have long been suspicious that some firms’ derivatives desks may potentially have inappropriate access to privileged information about a reference entity’s financial health, via colleagues on the lending side of the business. For example, without an airtight Chinese Wall between trading and lending, a firm that could realise large profits if protection it bought is triggered, could precipitate this outcome via its lending relationship with the reference entity.
The forum said its recommendations should help ensure that material non-public information obtained by financial services firms via lending or other relationships with a company is not inappropriately shared with, or used by, other business units or personnel within the same institution that transact in the securities and credit derivatives markets.
The statement of principles is the result of discussions between forum members since the end of 2002. The forum consists of the Bond Market Association, the International Association of Credit Portfolio Managers, the International Swaps and Derivatives Association, and the Loan Syndications and Trading Association.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact [email protected] to find out more.
You are currently unable to copy this content. Please contact [email protected] to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email [email protected]
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email [email protected]
More on Structured products
Derivatives
Callable repack frenzy opens up new options market in Europe
Demand driven mainly by French life insurers looking for alternatives to low-yielding sovereign bonds
Receive this by email