FSA Issues Warning on Credit Derivatives

On February 22, 2005, the Financial Services Authority, issued a Press Release that describes the regulator's concern over the amount of unsigned confirmations outstanding between counterparties for OTC credit derivatives.

Gay Huey Evans, FSA's Capital Markets Sector Leader, issued a letter to the Chief Executive Officers at relevant firms that states the Authority's concern that operational procedures may be "unable to keep up with the pace of maket development". The FSA has asked firms to examine their operational risk management framework and to ensure that proper systems and controls are set in place. In the letter, the FSA states that confirmations should be affirmed promply after the transaction as been agreed.

Currently, industry organizations such as the AMF and ISDA have taken action and are working with market participants in addressing this operational risk issue in order to enhance confidence in the marketplace.

Click here to read the FSA Press Release

Click here to read the FSA Letter to CEOs on Credit Derivatives

SEC to Hold Roundtable on Sarbanes-Oxley and Internal Controls/SEG to Develop Feedback

On February 22, 2005, The Securites and Exchange Commission announced that it will hold a roundtable discussion on April 13 to solicit feedback regarding the experiences of firms in implementing the new internal control requirements under Section 404 of the Sarbanes-Oxley Act. Section 404 requires firms to submit reports on internal controls relating to the financial reporting process and to the effectiveness of those controls. As part of its Advocacy Agenda for 2005, the AMF Senior Executives Group identified SAS-70 Best Practices as one of its top priorities. Accordingly, members of the SEG will articulate how a standard SAS-70 could benefit asset managers and provide the SEC with valuable feedback.

Click here to read the SEC Press Release (February 22, 2005)

Click here to read the SEC Press Release (February 7, 2005)

SEC Announces New Appointees

This morning, SEC Chairman William H. Donaldson announced the appointments of Joseph A. Hall to serve as Managing Executive for Policy and Martha B. Peterson to serve as Counselor to the Chairman at the Securities and Exchange Commission.

Click here for more information on these appointments

NOTE: This Weekly Report on Proposed Reforms Affecting Asset Managers is a service of the Technology, Operations and Asset Manager Relations Department of The Bond Market Association. We encourage your input as this communication is designed to promote dialogue among members of the Forum and the Association. Please feel free to contact Joseph Sack, Executive Director of the Senior Executives Group of The Asset Managers Forum or Douglas Taggart or Elisa Nuottajarvi of the staff of The Bond Market Association.