New Derivatives Bill Best Case for Corporate End-users, Says Reval

The clear definition of a corporate end-user of over-the-counter (OTC) derivatives, introduced in a new bill by US Senate Agriculture Committee Chairman Blanche Lincoln (D-Ark), addresses most of the concerns previously held by companies that use derivatives to hedge commercial risk, says Reval, a derivative risk management and hedge accounting solutions provider.

“Senator Lincoln’s bill does what no other bill does, which is that it defines what an end-user is and more clearly articulates what an end-user will be exempted from,” said Reval chief executive officer (CEO) and co-founder Jiro Okochi, who testified on behalf of corporate end-users last December before the Senate Agriculture Committee hearing on OTC derivative reform.

“It is unfortunate that FX forwards and FX swaps are no longer exempted outright as they have been in previous proposals, but we may now be at that juncture where it is as good as it gets for end-users,” he said. Senator Lincoln’s Wall Street Transparency & Accountability Act of 2010 is the last bill to be proposed in an effort to reform the OTC derivatives market.

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