On Tuesday 26 January AmCham EU hosted a well-attended panel discussion on risk mitigation at the monthly plenary meeting.

The keynote speaker was David Wright who is the current deputy director-general for the Internal Market and Services in the European Commission. Wright has been at the epicenter of the ongoing wave of legislative initiatives on financial services regulation and supervision. Wright predicted that the new Commissioner, Michel Barnier, might surprise his critics. Among the key priorities of the new Commissioner are derivatives and crisis management. Wright also discussed other major dossiers with AmCham EU members, including supervision of the financial services sector, remuneration, accounting standards, and corporate governance.
 

PHOTOS: (Top) David Wright, Deputy Director-General, Internal Market and Services, EC (Below) Panellists: Richard Kaye (JP Morgan) co-chair AmCham EU's financial services and company law committee; Kurt Schäfer, vice president Daimler Treasury Risk Management; Patrick Pearson, head of unit, financial markets infrastructure, EC; Kay Swinburne, MEP; and Roger Cogan, director of European Policy, ISDA

Earlier that day a panel discussed how corporations use derivatives to mitigate risk and how upcoming regulatory reforms are likely to change this. The panel participants consisted of representatives from the European Commission, the European Parliament, the car manufacturer Daimler, and the International Swaps and Derivatives Association (ISDA). The panellists agreed that, although derivatives did not cause the financial crisis, new legislative proposals are likely to change how companies use derivatives to mitigate risk.

Panellist Patrick Pearson, who is heading the Commission’s unit on financial markets infrastructure, argued that the main priority for the Commission is to increase stability to the European financial system rather than ensuring low cost or competition for market players. Pearson also made a distinction between corporate end-users of over-the-counter derivatives. Those corporate end-users that use derivatives to minimise risks might be exempted from new, and possibly tough, EU legislation.

Kurt Schaefer, vice president, Daimler Treasury Risk Management, explained how they as a major European company benefits from the derivative tool to hedge risks in the form of exchange rate deals. Tough regulation could make risk mitigation for corporate extremely costly and burdensome.

Roger Cogan, director of European Policy, ISDA emphasised that derivatives are real economy utilities which 471 of Fortune 500 companies make use of. Cogan also stated that the financial industry in principle supports many of the proposals on the table. He also encouraged corporate to actively illustrate the possible economic cost of new regulation to policy makers when engaging in the discussion.

Kay Swinburne, MEP, emphasised the need for corporate to engage policy makers in the discussion especially since many are confused about how corporations use derivatives. “People on the street do not like bankers these days but they do care about the real economy”.

The panel was moderated by Richard Kaye (JPMorgan) and co-chair of AmCham EU’s financial services and company law committee which organized the event.

For further information on the activities of  AmCham EU’s financial services and company law committee please contact Christian Borggreen at the AmCham EU secretariat.