We believe that all of the separate initiatives noted in this report, in their substance, variety, and scope essentially reflect certain fundamental lessons reinforced from our studies of the Barings failure, which are: - first, that better mechanisms for sharing information related to large exposures, and for communication during emergencies among regulators and market authorities, were critically needed in order to reduce the potential for disruptive market events, and to manage them and their consequences appropriately should they materialize;
- second, that market users did not have adequate knowledge of the scope and nature of existing market protection and procedures, in particular as to the treatment accorded their positions, funds and assets in a worst case scenario, and that enhanced transparency could assist them to act appropriately during a disruptive event; and
- third, the need for market authorities to agree and implement standards of best practice related to market default procedures and the treatment of customer positions, funds and assets by markets and financial intermediaries.
These lessons have resulted in the following fundamental changes: - Large exposure companion information sharing arrangements at the regulator and market level, which are unique in that they are trigger-based and permit an integrated multilateral assessment of market risk;
- the development of procedures to better coordinate and respond to a market crisis once it has materialized;
- initiatives to increase the transparency of market protection and procedures, including proposals for the strengthening of client asset protection;
- initiatives intended to encourage the development of "best practices" concerning market default procedures and the treatment of positions, funds, and assets to contain systemic risks; and
- reviews by regulatory authorities of the situation in their domestic jurisdictions, leading to change in some cases.
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