Banks and securities firms should publicly disclose more information about their trading and derivatives activities, international regulators said Tuesday.
The Basel Committee on Banking Supervision and the Technical Committee of the International Organization of Securities Commissions released a 34-page document outlining the qualitative and quantitative disclosures regulators want to see. The disclosures are recommendations, not requirements. A copy is available on the Bank for International Settlements Web site at www.bis.org/new.htm.
The two groups of regulators said the added disclosures should increase market discipline and make financial markets more efficient. In addition to disclosing the nature and scope of trading and derivatives activities, banks and securities firms should disclose how these activities affect earnings and the myriad risks facing the company, including credit, market, liquidity, operational, legal, and reputational risk.
"Institutions should also disclose information produced by their internal risk measurement and management systems on their risk exposures, and their actual performance in managing these exposures," according to a joint release. -- Barbara A. Rehm