Companies are hoping that the European Commission will give them relief from complying with the derivative-reporting rules under the European Market Infrastructure Regulation (EMIR).
Nearly two-thirds (65%) of respondents to a poll by treasury software company Reval said they expected the European Commission to provide them with a relief mechanism. This is despite the fact that the deadline of 12 February is looming.
Furthermore, more than half (58%) of respondents to the poll revealed that they are either not ready to comply with EMIR or do not expect to be ready for three to four months.
If the Commission does offer companies relief from complying with the regulation, it won’t be the first time that a regulatory authority has done so. The Commodity Futures Trading Commission (CFTC) in the US has issued a series of No-Action relief letters for various derivative-related rules coming into effect under the Dodd-Frank Act. Meanwhile, the Commission has pushed out the deadline for implementation of the Single Euro Payments Area a further six months until August 2014.
“Companies seem to be expecting that they will receive some kind of relief from complying with the EMIR deadline next week,” says Guenther Peer, regional vice president, solutions consulting EMEA at Reval. “With SEPA’s extended transition period and the issuance of No-Action relief letters from the CFTC in the US, it seems that companies have become accustomed to shifting dates for regulatory compliance. This could be the reason why many companies report that they are not ready to comply with EMIR.”
Under EMIR, all EU financial and non-financial counterparties to a derivative contract must report their trades on a daily basis to one of the six registered trade repositories. This also applies to intragroup transactions.
In addition, EMIR requires central clearing for certain classes of OTC derivatives for financial institutions and complex corporates, and the application of risk mitigation techniques for non-cleared transactions.
Sally Percy is editor of The Treasurer