February has so much to offer. 28 days and three deadlines directly affecting the professional treasury community.
The first passed seamlessly. We now have a new LIBOR administrator - ICE Benchmarks - so now we have ICE LIBOR with BBA LIBOR consigned to history. Our congratulations go to all who have contributed to this important transition without major financial market disruption. Please see our latest technical briefing document. This is one more important step toward fulfilling the ten Wheatley LIBOR report recommendations. Additionally, the FSB’s Markets Practitioner Group is also conducting further research work on the future development options for LIBOR. The global treasury profession is actively contributing to this work. We await the FSB’s report with interest, ”fixed” of course.
The second deadline – SEPA – that’s to say, the migration deadline didn’t change. It remained 1 February but there was the realisation (by the European Commission on 9 January 2014) that full transition was unachievable, resulting in backstop compliance date of 1 August 2014. See their press release on the subject. Treasurers who have worked night and day within their businesses to get everything organised to achieve the original deadline have been left thinking, “what a shambles”. Their senior finance and IT colleagues concur.
The third deadline, which is now upon us, is the 12 February EMIR reporting deadline. It is fast becoming the sequel, “Shambles II…you thought it was over”. It beggars belief that the European authorities, acting through national regulators, have managed to serve up legislation which criminalises the failure to report derivatives without first ensuring the requisite market infrastructure is in place, fully tested, properly communicated and understood. Some of the rule interpretation is still unclear with official guidance and recommended market practice around “UTIs” (unique transaction indicators) problematic. Naturally, even the definition of what to report differs across national boundaries. As the deadline approaches it is not surprising that national regulators are indicating to non-financial corporates that strict enforcement of the new rules from day one will be tailored toward a best endeavours effort. It is not often that we look longingly to the US legal system but at least under that regulatory framework you could request a no-action letter. It is no wonder that the questions were flying thick and fast at our latest EMIR webinar.
No doubt in years to come we will all look back on this period and reflect. Some will say it was necessary as “no pain no gain”. It is my view that non-financial corporates of all shapes and sizes will still be asking the same questions:
On a happier note, I’m delighted that as usual, February will also give us cause to celebrate the professional treasury highlights of 2013. At the end of this week the Treasurer Deals of the Year Awards dinner takes place. Watch out for the February copy of the Treasurer and read what it takes to triumph.
Please don’t forget to join us at the ACT’s Cash Management Conference. Find out the latest practical tips from professional treasurers.
Why the reference to Euston? Ah, that’s the European regulatory equivalent of a problem!
