Proposed Changes to OTC Derivatives Could Impact Corporate Use

Corporate treasurers whose companies use over-the-counter (OTC) derivatives to hedge interest rate, currency, or commodity exposures will want to look closely at reforms to the market now under consideration in Washington. A report issued by the Department of the Treasury titled “Financial Regulatory Reform: A New Foundation: Rebuilding Financial Supervision and Regulation,” contains a number of proposed changes to the U.S. financial regulatory system. Among them is “comprehensive regulation of all over-the-counter derivatives.”

Although it seems to have gone pretty much unnoticed among corporate financial types, the proposals would affect more than just banks and financial institutions, says Jiro Okochi, chief executive officer and cofounder of Reval.com, Inc., a provider of derivative risk management and hedge accounting solutions. “Awareness seems low,” Okochi says. “Corporations think it’s all about banks and credit default swaps.” (more…)