Some of the proposals are not particularly relevant to non-financial companies but the ACT has submitted a response covering those areas most likely to impact normal treasury activity. The ACT has expressed serious concerns around the proposals for OTC derivatives which would require any derivatives that were capable of being put through central clearing to be dealt on an exchange, thus removing the flexibility of dealing OTC and imposing the requirement to put up cash collateral (margin). In the context of the draft regulation of OTC derivatives (the European Markets and Infrastructures Regulation) the Commission has already accepted the views of end users that mandatory margining would impose an unwarranted liquidity burden on end users, so it is particularly perverse if another piece of legislation backtracks of the principles so recently agreed elsewhere in the Commission.
The ACT is not supportive of some of the further proposals for pre and post trade transparency in the bond and derivative markets. These markets are far less standardised compared to the equity markets, so that availability of such data would not necessarily generate increased competitiveness and price discovery. The ACT is further concerned over some of the proposed loss of flexibility for customers to choose their client categorisation which in turn determines the extent of various investor protections and costs.
The commission also considers processes around underwriting and placing of securities and the ACT has some reservations here too.
