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APG, PGGM expecting extension for pension funds' EMIR exemption

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The European Commission is likely to extend pension funds’ exemption from the European Market Infrastructure Regulation (EMIR) – which aims to increase stability in the OTC derivatives market – to 2017, according to asset managers APG and PGGM. 

Together with the Dutch Pensions Federation, APG and PGGM – asset managers for the €334bn civil service scheme ABP and €156bn healthcare scheme PFZW, respectively – have been the chief advocates for the Dutch pensions industry in Brussels calling for the postponement or adjustment of EMIR. 

They have argued repeatedly that the regulation will come at the expense of pension funds’ returns while increasing financial risks.

They have also claimed that, within the European Union, Dutch pension funds would have the most to lose.

A spokesman for PGGM said: “Although the current exemption is officially to expire on 16 August, we fully assume there will be an extension of two years.

“However, it has not yet been decided by the European Commission.”

An APG spokesman said it also expected the extension to become a reality soon.

“We think the chance is more than 50%, but we can only be sure after the decision has been taken,” he said.

Under EMIR, European pension funds would have to set aside dozens of billions of euros worth of high-quality collateral – cash or very safe bonds – for derivatives transactions.

Because these assets cannot be invested, the regulation is likely to hinder the growth of the European economy, APG warned.

The asset manager also previously argued that a spike in demand for collateral on interest swaps, in the event of sudden swings in interest rates, also carried system risks.

PGGM has also claimed that the requirement to deposit collateral with central clearing houses will create concentration risks.

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