The role of the House of Lords European Union Committee is to scrutinise EU law in draft before it is agreed in the EU. The Committee starts its work at the earliest possible stage in the EU decision-making process. In December 2009 it called for evidence on the European Commission’s proposal on OTC derivatives (Communications on ensuring safe and sound derivatives markets).
The ACT has submitted evidence to the committee explaining that any requirements for mandatory margining should not apply to non financial companies. Partly because such companies pose no material risk, but most importantly because any such requirement would introduce new and significant cash flow risks during the life of any derivative contract. This would be damaging to individual companies and the wider economy as companies responded to the new risk.
