LONDON, April 30 Reuters Global banking regulators on Tuesday proposed stricter standards for banks when assessing risks from customers to avoid the mismanagement highlighted by the collapse of Archegos, and episodes of volatility in commodities and Britain39;s government bond market.

The Basel Committee, made up of banking regulators from the G20 economies and elsewhere, said banks needed to improve how they manage counterparty credit risks CCR presented by clients.

It is the latest sign of how regulators are scrutinising links between lenders and the vast nonbank sector made up of private equity, insurers, investment funds and family investment offices.

Weaknesses pertain to due diligence, both at initial onboarding and on an ongoing basis; credit risk mitigation practices such as margining; risk measurement practices related to potential future exposure and stress testing; and the governance and senior management oversight of CCR, Basel said in a consultation paper.

The greatest potential benefit in terms of improvements in CCR management are expected to be in cases where banks have highrisk exposures to nonbank financial intermediary counterparties.

There have been cases of significant mismanagement of counterparty credit risk CCR in recent years, including events linked to the failure of Archegos Capital Management in March 2021, which caused over 10 billion in losses across numerous financial institutions, Basel said.

Other cases include commodities market…