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Global Banks Struggle to Report Counterparty Risk 

January 23, 2014
Vincent Ryan, CFO

If you thought banks had their act together with regard to assessing counterparty risk in the derivatives markets, you would be wrong. According to a report from the Senior Supervisors Group (SSG),  a global watchdog headed by the Federal Reserve Bank of New York’s Sarah Dahlgren, large banks are still unprepared to deal with market disruption and risk-management issues that crop up in the over-the-counter derivatives markets.

“Our observations in this report indicate that firms’ progress toward consistent, timely and accurate reporting of top counterparty exposures fails to meet supervisory expectations as well as industry self-identified best practices,” Dahlgren wrote in the report’s cover letter. As a result, if a financial institution were to be on the brink of collapse, many large banks would still be highly vulnerable to contagion risk.

Read more: CFO

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