Hedge Funds

Financial risk management watchdog issues recommendations


The Counterparty Risk Management Group II this week made extensive recommendations for banks, hedge funds and other financial institutions to use in policing themselves to reduce the risk of systemic financial shocks.

The report is the product of a group of 14 financial industry players headed by E. Gerald Corrigan, who oversaw the New York Federal Reserve Bank when, in 1998, it averted a global financial crisis by orchestrating the bail out of Long-Term Capital Management by its lenders. The first Counterparty Risk Management Group met in the wake of that event.

The group, which includes hedge fund