PRAGUE -- The countless hours agonizing over legislation, amendments and white papers are starting to get the better of some industry officials. Frustration was boiling up today at International Swaps and Derivatives Association AGM.
For those who are tracking legislative developments cross-border, the pressure is starting to mount, but, from an end user perspective, it is developments in the European Union which officials have found most frustrating. As a firm or company based in the E.U., legislation is already a time consuming process when you consider the constant barrage of legislative amendments from three different lawmakers in Brussels, a regulatory body in Paris, and the individual regulatory bodies and political groups in the 27 member states.
These end users, amid the constant legislative amendments, are finding it difficult to prepare for regulation as communication between E.U. member states falters.
One example was provided by Ralf Lierow, senior financial manager at Siemens Treasury GmbH. On the regulatory development panel, he pointed to a recent paper issued from France, which presented a view on end user thresholds, something Lierow wanted to lobby against. Yet, when he approached the German regulator, they had not seen the paper, so the company had to provide the paper to the regulator to be reviewed. “How can you do any realistic business planning?” said Lierow.
He also bemoaned the way constant E.U. legislative amendment proposals are detailed, and voiced his opposition to a vote in a European Parliament committee to ban naked credit default swap trading. In terms of amendments exempting fx forwards and swaps, he likened trying to identify those amendments in legislative papers to an Easter egg hunt. European politicians should not “torpedo business models,” he said, moving on to question the feedback from firms and companies pointed to by European legislators as one reason for banning naked CDS. “Sorry, did someone ask me? Did I say that?” he said.
Another official on the sidelines of the AGM noted that a number of regulators from E.U. member states are not in favor of banning naked CDS. The official noted that one reason could be that banning naked CDS could harm liquidity, meaning that sovereigns could find it harder to fund themselves at lower costs.
So there could be comfort for the industry that some regulators are in opposition to a CDS ban, although you feel the distribution network of such views and papers needs to be improved.
