âWe support the four objectives for legislative reform that were identified by Treasury Secretary Timothy Geithner, but the ramifications for many business users of currently proposed legislation could be profound; many users are only beginning to understand the implications and costs. One-size-fits all legislation is risky. If new legislation doesnât recognize the differences between users, the responsible businesses which use OTC derivatives to mitigate everyday interest rate, foreign currency and commodity risk may be burdened with significant incremental costs. In addition there could be major complications with current trades, challenges with accounting hedge effectiveness, and a lack of liquidity in products that could make responsible hedging very expensive or impossible,â according to Mike Bontrager, Founder and CEO, Chatham Financial.
The new website features resources for users to become more informed including a summary of â9 Consequential Points to Consider for OTC Derivatives Legislationâ, âWhy Hedging Worksâ, an interactive blog featuring updates from Capitol Hill, commentary from discussions Chatham and others in the industry are having with Congressional staff and leaders on issues and alternative options, and most importantly a chance for business users to make their voices heard on how currently proposed policy could detrimentally impact their business.
âPolicymakers in Congress, Treasury and regulators have shared with us directly that the voice of business end users for OTC derivatives is not being heard in Washington. We are seeking to change that by engaging business leaders and policymakers to make sure everyone is well informed and understands the issues and implications. We believe good derivatives reforms can be achieved without hurting businesses which rely on OTC derivatives to responsibly manage their risks,â according to Dave Hall, Chief Operating Officer, Chatham Financial.
Sally Ingberg from Forest City Enterprises, Inc. (NYSE:FCEA and FCEB) after attending a meeting in Washington, DC among industry and government policy makers last week stated, âCompanies who depend on access to affordable and effective OTC derivatives to mitigate business risks everyday need to make their voices heard so that legislation intended to address issues created by a few does not result in new problems and risks for thousands of U.S. businesses.â
HedgingWorks.com is one facet of an overall effort Chatham has launched partnering with policymakers, industry associations, publications, and end-users to create better understanding and stimulate action. Chatham is publishing and distributing materials to educate stakeholders, and conducting webinars to bring greater transparency to the debate and the potential effects different legislative approaches could have on the wider market.