The International Organization of Securities Commissions Wednesday released a report setting out good due diligence practices for investment managers.

IOSCO’s Technical Committee put out the report, which contains guidelines aimed at assisting both investment management firms and regulators in assessing the quality of their due diligence concerning investments in structured finance instruments by retail investment funds.

The recommended practices examine the three stages which should be included in the due diligence process: analysing the underlying assets of the SFI, analysing the structure of the SFI, and how the SFI fits into the investment mandate. It also looks at how an investment manager should involve third parties, including credit rating agencies in the due diligence process.

The final report was developed in cooperation with industry representatives following a recommendation made in the Report of the Task Force on the Subprime Crisis, published in May 2008.

IE