A high-profile treasurers’ group has made a special plea on behalf of non-financial corporates (NFCs) working under the EU’s derivatives laws.
In a letter to EU authorities, the European Association of Corporate Treasurers (EACT) has asked for NFCs to be exempt from amended reporting rules set to take effect within the European Market Infrastructure Regulation (EMIR) later this year.
Addressed to European Commission vice president Valdis Dombrovskis and the European Securities and Markets Authority (ESMA), the letter states:
“We understand that Trade Repositories [TRs] are currently preparing for the implementation of the new rules, and corporate end users will only be able to make the needed changes once the TRs have prepared themselves.
“Given the extensive nature of the revised rules, and based on their discussions with TRs, corporates expect the implementation project to be vast and to require significant financial and other resources.
“This will be in addition to the resources already spent in previous EMIR implementation projects.”
The letter acknowledges that the reporting amendments “would significantly reduce the compliance burden and the associated costs on NFCs and would deliver a more proportionate reporting framework”.
However, it argues: “Considering the Commission’s proposal to exempt most NFCs from reporting transactions themselves, we feel that the investment required for implementing the new reporting rules would be a fundamentally inefficient use of resources.”
That is because NFCs “should expect to be subject to the reporting requirements only for a very limited period of time after the entry into force of the revised regulatory technical standards”.
In order to avoid such “purposeless” investment, the letter adds: “we would like to request the Commission and ESMA to consider not applying the new reporting rules to the NFCs that the Commission has proposed to exclude from a direct reporting obligation.
“One possible way to achieve this could be to request TRs and national competent authorities to continue accepting current reporting formats from such counterparties.”
Joining EACT as co-signatories to the letter were quoted-companies representation group European Issuers and the Coalition for Derivatives End Users.
The EMIR reporting amendments will enter into force across the EU on 1 November. Their final wording was published in the Official Journal of the European Union in January.