Manufacturers Win Exemption Under Derivatives Legislation

October 6, 2009

Bloomberg News reports, "Manufacturers such as Caterpillar Inc. and Apple Inc. wouldn't have to post extra cash as collateral for hedging transactions under legislation proposed to tighten oversight of the $592 trillion derivatives market." The draft bill "released by House Financial Services Committee Chairman Barney Frank on Oct. 2, drawn from Obama administration proposals, would require the most common and actively traded over-the-counter derivatives contracts to be bought and sold on exchanges or processed through a regulated trading platform." The NAM, US Chamber of Commerce and the Business Roundtable "lobbied Congress and the administration to exempt end-users from new rules and collateral requirements." Dorothy Coleman, the NAM's vice president of tax and domestic economic policy, said, "This bill is certainly very positive...It has clearer exemptions for end-users, which is something we've been pushing for." The draft would "expand the administration's exemption of end-users from collateral and clearing requirements."