With world financial markets in turmoil and the economic prospects of many European countries looking weak this is a vital and challenging time for all involved with the treasury profession. Against this background, as Chairman of the EACT, I will continue to seek to provide a unifying focus for issues that, on a European level, affect how the members of the national associations can operate.
Through our website we endeavor to provide useful informative about the EACT and provide a conduit for visitors to access the websites of the individual treasury associations making up the EACT.
Immediately before the EMIR reporting start date of 12 February the EACT sent a letter to the Internal Market Commissioner Michel Barnier stressing the numerous difficulties faced by non-financial counterparties in implementing the EMIR reporting obligation; we requested that the national supervisors adopt a flexible approach in the first months of reporting. You can read the letter here.
Response to the Financial Stability Board's Consultation on the Feasibility Study on Approaches to Aggregate OTC Derivatives Data
The EACT has responded to a consultation by the FSB on the issues associated with the aggregation of data held by trade repositories. We make the point that there is a risk that the aggregation of derivatives reporting data will be seen principally as a technical challenge instead of a challenge relating to the international inconsistency of the new regulatory requirements in respect of the reporting of OTC derivatives. We repeat the plea we have made previously elsewhere that the opportunity of the FSB work should be used to bring more consistency in derivatives reporting at international level.
The EACT has sent a letter to key EU decision-makers on the importance of ensuring continued access to capital market funding for European corporates. We currently see that whilst reducing reliance on bank funding and increasing the role of capital markets is a stated EU policy objective, in practice current legislative initiatives are not always supportive of this. We are particularly worried about the following developments which both discriminate against corporate bonds and ignore the important role they play in financing the real economy:
- The forthcoming Commission proposal on the structural separation of banks, which could substantially limit the ability of financial institutions to underwrite and make markets for corporate bond issuance. Furthermore, we understand from recent reporting that unhelpful discrimination is being introduced by exempting market making for government bonds.
- MiFID/R II, which would restrict market making of corporate bonds on certain venues – here again the planned restrictions would not apply to government bonds.