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Material nonpublic information guidelines released

The Joint Market Practices Forum last week released its final version of its principles and recommendations regarding the handling and use of material nonpublic information when managing credit risk. The guidelines had been presented in an exposure draft form in May 2003.

Following review and commentary on the exposure draft, the Forum, comprised of individual associations that adopted the recommendations, began circulating the finalized version last week. The Forum is a collaborative effort 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. Recommendations are intended to help ensure that material nonpublic information obtained by financial services firms, in the ordinary course of their 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 derivative markets.

With detailed policies in place for the handling of sensitive information by credit market participants, the Forum believes the guidelines help to alleviate "even the appearance of inadequate controls and procedures" which can be damaging and erode confidence in the market, it said in a statement. More information is available at each individual Forum member's Web site.

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