bank holding companies with large trading operations have been required to hold capital sufficient to cover the market risks
in their trading portfolios.
During the dot-com era, that pattern inexplicably got reversed -- VCs stopped taking technology risks and started taking market risks
-- with disastrous results.
By creating a single framework to examine all corporate exposures, including market risks
, financial risks and operational risks, companies gain a greater appreciation of aggregate corporate risk.
If this process were stayed while the trustee or the receiver for a failed counterparty determined whether to perform the contract, the delay would expose the nondefaulting party to potentially serious market risks
during the pendency of this decision process.
The Bank for International Settlements requires banks operating internationally to manage market risks
As such, mortgage companies exhibit varying approaches, degrees of sophistication and technological capabilities in measuring and managing the market risks
posed by their disparate, nonstandard asset classes.
The other two methods require companies to summarize their market risks
Fitch V-Ratings provide investors with a clear, consistent indication of the market risks
of mortgage derivatives.
chart: Middle East & Africa Market Risks
Disclosures About Credit and Market Risks
: This issue, too, relates to the SEC's reviews of filings, particularly in the area of derivatives activities for companies -- why they have derivatives; what credit and market risk
elements they're managing with the derivatives; and the success of their process of trying to manage risk.
The objective of the disclosure proposals is to help investors better assess the market risks
and better understand how those risks are managed" said SEC chief accountant Michael H.
Large corporations that once looked to banks for financing now have other funding sources and turn to banks principally for other financial services, including assistance in managing market risks