Several topics came out of International Treasurer’s editorial meeting this week, including attempts by derivative end-users to get the Commodity Futures Trading Commission (CFTC) to delay implementation of rules on inter-affiliate trades. Also, we’ll follow up with members of various NeuGroups on where they are in terms of pension liabilities. The topic of small treasury management vendors also came up, as some within the NeuGroup universe still prefer the independent players vs. the larger ones that have grown through consolidation (and possible not supporting the products anymore).
Derivative User Coalition Request.
Recently the Coalition for Derivative End-Users wrote two letters to the CFTC requesting delays to various rule implementations.
According to Chatham Financial, the first letter requests certain forms of relief from reporting requirements. Specifically the Coalition wants to push back reporting deadline from April to October; it wants to exempt end-users from having to report historical inter-affiliate trades and also to allow for annual reporting for end user inter-affiliate trades. The second letter asks the CFTC to exempt central treasury centers that are financial entities from the clearing requirement for their market facing trades.
The letters were signed by the Agricultural Retailers Association, the Business Roundtable, the Commodity Markets Council, the Financial Executives International, the National Association of Corporate Treasurers, the National Association of Manufacturers, and the US Chamber of Commerce. However, the Coalition says it represent “hundreds” of companies, all of whom “have been active in the Coalition throughout the legislative and regulatory processes, and our message is straightforward: Financial regulatory reform measures should promote economic stability and transparency, but should not impose undue burdens on derivatives end-users.”
Pension Gap.
It’s déjà vu all over again in the pension world. According to a Wall Street Journal story, corporate pension funds are in trouble again. The reason is that in the current low-interest-rate environment, pensions get needy, and the cost of feeding them goes up.
We’ll take a look at what companies are doing about this – they surely are not standing around. There are reported heavy flows into hedge funds and funds of hedge funds as portfolio managers, like everyone else, “reaches for yield” in the pithy words of Federal Chairman Ben Bernanke. We’ll ask some of our NeuGroup members in upcoming meetings where they are in terms of funding.
Small TMS Vendors.
There has been consolidation in the TMS space in the past several years with Reval’s acquisition of Austria-based TMS vendor ecofinance and the recent acquisition of IT2 by Wall Street Systems. We’ll take a look at the smaller providers, like Bellin Treasury and others that remain non-aligned and in at least Bellin’s case, no interested in being bought.