Dutch cabinet opposes permanent exemption from central clearing

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The Dutch government has indicated that it opposes a permanent exemption for pension funds from central clearing of swap contracts, arguing it would undermine general support for reform.

Responding to parliamentary questions from the liberal democrats (D66) and labour (PvdA) parties, finance minister Jeroen Dijsselbloem said that the European Commission’s decision to extend pension funds’ exemption from mandatory clearing of derivatives contracts beyond mid-2018 was “sensible”.

“Some pension funds already use central clearing for part of their portfolio, but a technical solution to responsibly take sufficient cash from the market or provide other collateral is still not available yet,” he said.

However, in his opinion, a solution must be found. Dijsselbloem emphasised that a permanent exemption was not an option as it would weaken support for mandatory clearing rules introduced under EMIR, as pension funds have a “significant position” as users of derivatives.

A survey conducted earlier this year by IPE’s Dutch sister publication Pensioen Pro revealed that the €23.5bn sector pension fund for private road transport (Vervoer), the €186bn healthcare scheme PFZW, and the €28bn Shell Pensioenfonds had already entered into central clearing.

Vervoer said that it involved less than 10% of its transactions. It also said bilateral contracts were often cheaper.

Dijsselbloem said it would be sensible for pension funds to keep preparing for central clearing while focusing on finding an acceptable technical solution.

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