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Strategies & Market Trends : Bonds, Currencies, Commodities and Index Futures

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From: Chip McVickar2/25/2005 11:00:50 AM
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Risk Watcher Group Part 2

WSJournal page C1 Feb 25, 05
It's a long article... perhaps someone will be able to post it?

short:
In 1998 in reaction to the LTCM blowup a committee was formed to called the Counterparty Risk Management Policy Group it has just been recalled and revived with the backing of the New York Fed.

These risk watchers are looking at credit-risk management among securities firms, hedge funds and others. Todays easy credit has led to the establishment of new products that can essentially hide their use of borrowed money, like credit-default swap markets.

Although there is no single hedge fund out there like of LTCM and its gargantuan positions, they are worried about the multiplicity of funds basically using the same risk management models and assumptions to put on identical trades.

It's about concern of leverage in the system and light regulation.
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