A very rare sighting January 23, 2013 at 8:53 pm

Brace yourself, gentle reader: democratic accountability for financial regulation may be coming our way. From Reuters:

The European Parliament may demand a rethink [of EMIR]… Members of the Parliament are discussing a resolution which, if approved next month, would trigger a formal review of the rules, two sources from the European Parliament said… The issue is with exemptions from the rules for “non-financial” companies, such as airlines, which use derivatives to hedge fuel costs.

If the Parliament approves a resolution rejecting some of the rules, the European Commission and the European Securities and Markets Authority (ESMA) will have to come up with alternatives… the Parliament considers that exemptions for users of derivatives from the “real economy,” such as airlines, are not flexible enough.

Quite right too. I hope that Sharon and friends follow through on this.

2 Responses to “A very rare sighting”

  1. It is interesting if “refinking” will requirements for bilateral transactions or also reporting obligation. In my opinion this second issue is underestimated. Why? Because reporting obligation relates also to non-financials, sometimes rather small corporates for instance with one IRS transaction… In such case the only posibbility is reporting by the Bank with whom such corporate made a deal. If so there is needed time to on-board such corporates to reporting systems …

  2. Agreed, but trade reporting is one of the few unequivocally good parts of the new regs, and the banks are well-placed to get this done. I’m very sympathetic about corporate clearing mandates, and hope the EU does lessen the burden of them, but I can’t see an excuse for not reporting bilaterals. At the end of the day, the bank has to be able to book the trade, and if it can book it, it should be able to report it.