NAIC to Hold Public Meeting on Hybrid Securities

On Sunday, June 11, 2006, the National Association of Insurance Commissioners ("NAIC") will hold a public meeting in Washington D.C. to discuss the transparency of the current process governing the classification of insurer-owned hybrid securities. According to a recent press release, invited parties will have the opportunity to comment on the ways in which the NAIC's Securities Valuation Office ("SVO") can enhance communications to the financial services industry when classifying hybrid securities, and to what extent the SVO can offer a rationale for its classification decisions.

Click here to read NAIC announcement on June 11 public hearing

Last month, The Bond Market Association and the American Council of Life Insurers ("ACLI") submitted a letter to the NAIC. In the letter, TBMA and ACLI urged the group to publicly announce when it is reviewing securities, including hybrid securities, so that all market participants have equal access to information. TBMA and ACLI have also asked the NAIC to inform the public when a classification or reclassification has occurred, and the reasons for such decisions.

Click here to read TBMA and ACLI letter to NAIC

We look foward to reporting on developments on the NAIC matter to the AMD and AMF next week.

Bank for International Settlements to Assess Risk Management Practices for Derivatives

At the AMF Quarterly Meeting on May 23, 2006, representatives from the Securities and Exchange Commission and the Federal Reserve Bank reported on a risk assessment initiative undertaken by the Bank for International Settlements.

The Bank's Committee on Payment and Settlement Systems has established a working group that will assess the effectiveness of current risk management practices with respect to the post-trade processing infrastructure in OTC derivatives markets.

According to a press release, this project will take a comprehensive view of existing arrangements and risk management practices in the broader OTC derivatives market and evaluate the potential for risks to be mitigated by greater use of, and enhancements to, market infrastructure.

Click here read press release from the Bank for International Settlement

NOTE: This Weekly Report on Policy Developments 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 Asset Managers Division of The Bond Market Association and The Asset Managers Forum. Please feel free to contact Joseph Sack, Executive Vice President of The Bond Market Association or Douglas Taggart or Elisa Nuottajarvi of the staff of The Bond Market Association.