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March 27, 2014

Dodd-Frank Swaps Rule Could Hurt End-Users, Groups Say

“WASHINGTON – A collective of business trade groups on Wednesday warned of potential risks for end users of margin requirements mandated under the Dodd-Frank Act.

“The Coalition for Derivatives End Users said the vast majority of companies responding to a recent survey conducted by the alliance worry the rules could adversely impact how they hedge risks. End users are non-financial companies, such as farmers and manufacturers, which use over-the-counter derivatives to hedge interest rate, currency and commodity price risks.

“Today’s survey results clearly demonstrate the devastating impact margin requirements will have on companies from virtually every sector of our economy,” said Michael Bopp, counsel to the Coalition for Derivatives End-Users, in a press release.

“It is unclear whether banking regulators will ultimately include non-financial end-users in final regulations implementing the Dodd-Frank margining requirements for swaps participants. (The bank regulators and other agencies issued a proposal in 2011.) The international Basel III capital framework completed this summer had excluded such end-users from similar requirements.”

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Read full American Banker article here.

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