Pension funds get earlier derivatives-clearing mandate in EU lawmakers' compromise

17 May 2018 4:27pm
Big EU pension funds would have to clear their derivatives sooner, in a compromise by European Parliament party leaders ahead of a committee vote today to overhaul rules for the financial instruments.

Employee retirement plans above a certain size threshold — to be set later — would get two more years free from having to send their derivatives trades to clearinghouses for risk management, under amendments worked out by lawmakers ahead of the Economic and Monetary Affairs Committee vote in Brussels.

The waiver could be extended by one year, according to the draft obtained by MLex, if needed to implement technicalities such as how pension funds can meet margin requirements without having to divert investments into cash.

But the transition would come faster than the European Commission’s original proposal — which was for a three-year waiver extendable by two years — in order to ease the way for pension funds to join the global clearing system for over-the-counter derivatives, such as swaps used to hedge the risk of interest-rate changes.