Dodd-Frank derivatives regulations continue to challenge corporate treasurers. Companies that use over-the-counter (OTC) derivatives to hedge their risks cite higher costs and increased administrative burdens, according to recent surveys, and a significant portion see different regions’ regulations resulting in a fragmented market.
But the biggest concern for U.S. companies that hedge with derivatives is the possibility that regulators will require non-financial end users to post margin on their derivatives positions.
There’s also concern about how derivatives regulations will affect companies with central treasury units, which are business units within multinationals that provide financial services such as netting of risks and trading derivatives for other units of their company. Almost half (47%) of the companies surveyed by the Coalition for Derivatives End-Users said they have a central treasury unit.