Treasury Today Country Profiles in association with Citi

EMIR: a growing concern for corporates

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With many corporates still agonising over the looming Single Euro Payments Area (SEPA) deadline, preparing for the European Markets Infrastructure Regulation (EMIR) has taken a backseat. However, meeting the requirements of EMIR will be crucial for multinationals with large derivatives exposures. But a lack of certainty around deadlines for reporting is creating confusion for companies, particularly those in Southern Europe.

For some multinational companies (MNCs) with large derivatives portfolios, fulfilling the European Markets Infrastructure Regulation (EMIR) reporting requirements will demand substantial infrastructural changes, a task not made any easier by the lack of certainty that remains about what needs to be delivered and by when.

Some companies are better prepared for this transition than others, observes Carlo Scotto, Senior Product Specialist at SuperDerivatives. Businesses based in Northern Europe, he says, tend to have closer relationships with their banking partners and are therefore more up to speed with the regulations and their implications; while their counterparts in Southern Europe, in Italy or Spain for example, appear to be a few steps behind.

“The majority of these corporations are not there yet,” says Scotto. “Many are unclear as to what the changes will mean for them, how they will hedge their existing portfolios post-EMIR, the required changes to infrastructure, and the exact timelines they will need to work to.”

Getting EMIR-equipped

“I think a lot of corporates are struggling with the EMIR workload,” says treasury management systems (TMS) provider BELLIN’s appointed EMIR Project Manager, Matthias Deschner. It is true that not all companies will need to invest in a TMS to become compliant with EMIR; that will largely depend on the amount of intra-company trading they carry out. Those with very little of this type of activity may find delegating the reporting requirements to their banking counterparties to be a more practical solution.

But for parent companies reporting on behalf of a many subsidiaries, the task will be much more complex. Following the introduction of EMIR, these companies will not only need to maintain relationships with all their existing executing brokers, but will also need to develop relationships with the yet-to-be-named trade repositories. TMS providers like BELLIN have features available for intra-company trading and overall EMIR compliance to reduce some of the additional burden on treasuries by automating the reporting requirements for derivatives transactions.

Have the impending reporting requirements boosted demand for TMS technology? Deschner admits there has been a spike in interest in recent months, but he believes this is largely on the account of the impending Single Euro Payments Area (SEPA) deadline, not as a result of EMIR.

“In nearly every discussion and request for proposal (RFP), companies will ask how prepared we are for EMIR,” he discloses. “BELLIN is as ready for EMIR as possible at the moment, of course. But SEPA is certainly the bigger issue. Although you can live without EMIR, if you can’t make SEPA transactions after the deadline then you will be in serious trouble.”