EMIR and its Challenges for Treasurers

New reporting obligations for financial institutions and companies in regard to OTC derivatives

As a reaction to the financial crisis, the US passed the Dodd-Frank Act in 2010 with the goal to regulate OTC derivatives. The EU follows suite with the European Market Infrastructure Regulation (EMIR), (EU) 648/2012: From February 2014, companies have to report OTC derivatives to a certified trade repository. This also applies to internal derivatives that are traded between corporate headquarters and subsidiaries. It will make transactions between the participants more transparent and to facilitate control.

Companies whose derivatives exceed a market-related clearing threshold also have to clear them via a central clearing house. Even if the clearing threshold is not crossed, all companies that trade OTC derivatives will have to ensure within the scope of their risk management that the clearing threshold is not exceeded. Furthermore, the market value of the derivatives has to be calculated regularly to be able to report on it.

These new regulations mean additional challenges for treasurers. They have to adjust processes and software solutions to the new regulatory obligations, choose a trade repository and regularly perform market value calculations in the future. If companies have to consolidate derivatives from different systems, the effort to adjust them is usually even greater. A central solution helps companies to ensure a complete overview of derivatives that have to be reported and supports the reporting process without having to take a detour via banks or external providers. An SAP approach for EMIR reporting lends itself to companies that manage OTC derivative transactions directly in SAP. Hanse will deliver an EMIR solution for our customers for both our SAP and non-SAP treasury products shortly.

Contact us to find out how your treasury is affected. We will gladly support you!