The formation of the Counterparty Risk Management Policy Group (CRMPGIII) was announced today and will be chaired by E. Gerald Corrigan, managing director at Goldman Sachs and Douglas Flint, group finance director at HSBC. The group will be Co-Chaired by Messers Corrigan and Flint.
Amongst the policy groups focus will be identifying opportunities to improve risk management practices as well as strengthening governance over risk appetite, counterparty risk, market risk, and all aspects of liquidity risk. The group will also work to understand how the leverage associated with such complex financial instruments can amplify risk, as well as work to improve distribution, marketing and disclosure practices associated with these instruments.
Other objectives include examining whether current accounting rules that decide whether certain classes of activities are booked on or off the balance sheet are appropriate; reflect economic reality; and take full account of risk and disclosure considerations. The group will also make specific recommendations as to how such accounting rules and related risk disclosure practices will be strengthened.
Lastly, the group will work towards strengthening the industry-wide financial infrastructure, particularly the infrastructure supporting over-the-counter derivatives in general and more specifically, credit default swaps.
The group expects to issue its report by the end of July of this year. Among its members are Madelyn Antoncic, managing director and global head of Financial Market Policy Relations at Lehman Brothers, Gary Lynch, chief legal officer at Morgan Stanley, Craig Broderick, managing director and chief credit officer at Goldman Sachs, J. Chandler Martin, executive vice president at Bank Of America, Ken DeRegt, chief risk officer at Morgan Stanley, Edmond Moriarty, senior vice president and co-chief risk officer at Merrill Lynch, Andrew Feldstein, chief executive officer at Blue Mountain Capital Management, Edward J. Rosen, Esq., partner at Cleary Gottlieb Steen & Hamilton and Peter Fisher, managing director and co-head of Fixed Income at BlackRock, among others.