By Aline van Duyn in New York
Published: August 27 2009 22:34
European companies are hitting out against proposed reforms of the derivatives markets, saying that new rules requiring contracts to be routed through clearing houses could impose a huge drain on corporate cash.
In a comment paper criticising European Commission proposals for the over-the-counter derivatives market, the London-based Association of Corporate Treasurers wrote that current plans could require companies to hold billions in extra cash against positions or post as margin.
Already, US companies ranging from Caterpillar and Boeing to 3M – which use derivatives contracts to hedge interest rate, currency and commodity price risks – have been lobbying lawmakers to highlight the potential higher costs of a proposed overhaul of rules on derivatives.
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