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Organisations representing more than 8,000 companies across Europe have welcomed 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. They 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. They understand the EC’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.