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The report's recommendations include measures to force banks to account for more assets on their balance sheets, tougher standards for selling complex debt instruments (such as bonds backed by subprime mortgages), reforms on the credit default swap markets and stonger standards for managing risk and liquidity.



In practice, this means that pension funds and institutional investors would no longer be automatically allowed to buy complex financial products. This would probably lead to a decrease in securitisation and other high-risk complex products.



Recommendations are part of a report by the Counterparty Risk Management Policy Group. This group was created in January 1999 by 12 major commercial and investment banks with the objective to promote enhanced strong practices in counterparty credit and market risk management.



The report was backed by banks including JP Morgan Chase, Merrill Lynch, Citigroup, HSBC, Lethman Brothers and Morgan Stanley.