Recommendations for Handling Nonpublic Information when Managing Credit Portfolio Risk

The Bond Market Association, the International Association of Credit Portfolio Managers, the International Swaps and Derivatives Association and The Loan Syndications and Trading Association (the "Associations") have been working jointly to adopt standards and practices for the handling and use of material nonpublic information when financial institutions engage in credit portfolio risk management activities, an issue of common interest to their constituent memberships, and to other credit market participants.

In recent years, firms that originate or acquire loans or otherwise have credit exposures to particular companies have turned increasingly to the credit derivatives and securities markets to help manage risk. This development has generated efficiencies for lenders and borrowers alike, as innovations in risk management instruments and techniques have enhanced the depth, efficiency and liquidity of the debt markets. At the same time, the fact that firms participating in the credit markets may receive material nonpublic information - in the ordinary course of their business, and as a natural consequence of their lending or other relationships with a company - requires that handling and use of such information in the credit derivatives and securities markets be addressed in a careful and comprehensive manner.

To provide market-based guidance and perspective on these issues, the Associations have developed, and are now publishing for industry review and comment, the following document, entitled Statement of Principles and Recommendations Regarding the Handling of Material Nonpublic Information by Credit Market Participants. Among other things, it is hoped that this document will be helpful in raising awareness within the industry regarding important issues that arise in the context of managing credit portfolio risk, and controls and procedures that firms may employ to ensure compliance with applicable law and sound business practice.

The Associations welcome written comments on this document, which are due by June 16, 2003. Comments should be transmitted as follows:

Via e-mail: jmpfcomments@bondmarkets.com

Via regular mail: Joint Market Practices Forum
c/o TBMA, IACPM, ISDA and LSTA
360 Madison Avenue, 18th Floor
New York, NY 10017