Major players in Dutch pensions industry criticise derivatives proposals
EUROPE - Major players in the Dutch pensions industry have criticised proposals for new technical standards on regulation of over-the-counter (OTC) derivatives, saying they will lead to more expense for pension funds and may not make processes safer anyway.
The Pension Federation - together with pension fund managers APG, MN, PGGM, Shell and Syntrus Achmea Asset Management - was responding to a consultation by the European Securities and Markets Authority (ESMA) on the draft technical standards for the regulation on OTC derivatives.
In a statement, the Dutch pensions industry association said: "The Pension Federation notes that the proposals are expected to lead to increasing costs for pension funds and their administrators.
"Moreover, it is doubtful whether the increase of a 'confidence level' automatically leads to more security."
In addition to these points, the Pension Federation said it opposed publishing information about so-called intra-group trades.
These, it said, should not contain identities of counterparties involved in relevant transactions.
The association also argue that ESMA should ensure that the recycling of 'non-cash collateral' - such as bank guarantees - through the central clearing party (CCP) is prohibited.
"This non-cash collateral should be booked in a separate account under the name of the end user," it said.
ESMA published the consultation paper on the technical standards for OTC derivatives trades in June under the EMIR (European Market Infrastructure Regulation), following the European Parliament and the European Council's approval of the EMIR this spring.
ESMA has said it aims to reduce risks via the use of central clearing and risk mitigation techniques.