Companies Welcome Relief Brought By Commission’s Derivative End-User Proposals

Organisations representing more than 8,000 companies across Europe have welcomed today’s EMIR proposals by the Commission as an important step forward in relieving burdens for businesses which use derivatives to manage their commercial and financing risks.

We have long called for the Commission to uphold the commercial hedging exemption and to tackle the disproportionate burdens for Europe’s businesses from EMIR’s current dual-sided reporting regime.

European companies currently face an estimated €2.4bn-€4.6bn reporting cost annually. We understand the Commission’s proposals intend to:

Place full responsibility for the content and timeliness of supervisory reporting to repositories on the financial counterparties transacting with non-financial counterparties hedging for commercial purposes (“NFC minus” companies)
Exempt from reporting to repositories the intragroup transactions of non-financial companies

These transactions are used by non-financials’ centralized corporate treasury units (or other dedicated units) to mirror external transactions and to assign them to the appropriate part of the group
These are not systemically relevant and support the risk management function of the treasury units

Addressing these burdens must be achieved while improving data quality for supervisors. It is clear this can be delivered by moving to an entity-based reporting regime as practiced internationally today, where data is delivered to supervisors via straight-through processing undertaken by financial firms. Other major international jurisdictions operate today on the basis of such a single-sided reporting regime for companies hedging for commercial purposes.

Alongside the reporting relief, companies welcome the Commission’s commitment to the existing commercial hedging exemption for companies from clearing and margining, and the move to an asset-by- asset class assessment for this exemption.

The hedging exemption is critical to bringing certainty to business decisions and supporting industrial activity in Europe.

Today’s announcements are an important step forward in reducing the burdens on corporates. We look forward to working with Parliament and Member States to ensure they deliver their intended positive impact for Europe’s economy as a whole.