The Systemic Risk Council, a private sector group co-formed by the CFA Institute and led by former Federal Deposit Insurance Corp. chair Sheila Bair, will convene this month to monitor and encourage regulatory reform of U.S. capital markets focused on systemic risk.

The Systemic Risk Council is comprised of a diverse group of experts in investments, capital markets and securities regulation, including senior advisor Paul Volcker, former Chair of the Federal Reserve.

According to Bair, concerns over the slow progress of regulators and standard-setters prompted the creation of the council, which plans to monitor and evaluate the activities of those developing and implementing Dodd-Frank provisions related to systemic risk. This includes the Financial Stability Oversight Council (FSOC) and the Office of Financial Research.

“The goal is to devise a system that can identify risks threatening market stability before they become a danger to the general public,” says Sheila Bair, senior advisor to The Pew Charitable Trusts and chair of the Systemic Risk Council.

She adds, “As evidenced by the financial crisis and recent headlines, we need a more efficient early-warning system to detect issues jeopardizing the functioning of U.S. financial markets before they disrupt credit flows to the real economy.”

Two of the most critical tasks, she says, are determining how to impose greater market discipline on excess risk taking, and hot to effectively end the doctrine that institutions are too-big-too-fail.

The council expects to evaluate and provide commentary on the existing efforts of regulators, in an effort to design and implement a credible risk oversight function. It will report on and provide commentary to the FSOC and its member regulators on any regulation adoption related to the prevention of prevent the severe financial disruptions.

“Despite the magnitude of the financial crisis, prospects for major reform of regulatory systems are inadequate and vague,” says John Rogers, CFA and president and CEO of CFA Institute. He is also a member of the new council.

“The reforms to our nation’s financial system enacted by Congress and signed by the president in 2010 were an important first step. The task now is to implement these reforms,” says Rebecca W. Rimel, president and CEO of The Pew Charitable Trusts.

The council plans to issue a call to action on June 18, detailing the objectives and future plans of the council.