One of the first tasks of the Bond Market Association's 17-member distressed debt committee, to be announced today, will be to establish a written set of recommended trading protocols. No written rules currently exist, and as the market grows, it is useful to have a set of standards that will be followed by all the major firms, according to Michael Carley, chairman of the committee and a director in the distressed debt group at UBS Warburg. "You have a high-yield committee that addresses high-yield issues--every community has its own issues, so it's wise that the corporate arm of the BMA has created a committee to look at issues affecting the distressed community specifically," he says.
Examples of issues the committee will address include potential controversy over who is owed interest payments that were missed prior to an issue changing hands, says Michele David, BMA assistant general counsel and principal staff adviser to the committee. [She stresses, though, that the controversy has not, to her knowledge, flared up into any lawsuits or threats of lawsuits.] David says she hopes to publish a recommended set of trading practices by early 2004. The committee also plans to set up meetings with regulators at some point in the future, though nothing has been scheduled yet, David says.