Reval Commends House Agriculture Committee on Proposed Amendment to OTC Reform Bill

New York, October 21, 2009 – The pace to reform the OTC derivative markets continues to heat up with the House Agriculture Committee completing its mark-up session today on Capitol Hill. With the House Financial Services Committee (HFSC) voting on its mark-up last week, attention has been focused on how the House Agriculture Committee would close any gaps between the two bills.

On the positive front for corporate end-users of OTC derivatives, the amendment today reversed stipulations associated with Fx forward and Fx swap contracts and now cleanly exempts them from the pending regulations, thereby not impacting the way corporate end-users currently hedge their business risks against fluctuating currencies.

“This exemption puts all three proposals—the Administration, HFSC and now the Agriculture Committee—all on the same page, which is something Reval has been actively lobbying for on behalf of our corporate clients,” says Jiro Okochi, CEO of Reval.

Another key change in the proposed amendment today was the definition of a major swap participant. The original bill had defined a major swap participant as an entity with a substantial net position in un-cleared trades.

“As most end-users do not trade and net off derivative positions against each other, but instead typically have derivative positions going in the same direction, there was the potential for misclassifying large corporates as major swap participants, instead of the intended active speculators like hedge funds,” Okochi explains. According to Okochi, if a company were to be classified as a major swap participant, it would be regulated as stringently as a swap dealer and without the benefit of any exclusion from clearing standardized trades or posting margin.

Despite these two important changes for corporate end-users, costs to end-users will increase as long as swap dealers are required to post capital and margin requirements to regulators.

“I am gravely concerned that corporates will be asked to post two-way collateral to banks, despite being exempted from posting margin to clearing firms or, worse yet, banks may simply decide it’s too cost-prohibitive to continue to support the end user market with these customized OTC derivatives,” adds Okochi.

Reval continues to be active in meeting with lawmakers and regulators in effort to guide a fair reform of the OTC derivative markets.

For more information about Reval and Jiro Okochi, please visit the news room at www.reval.com

About Reval

Reval is a global SaaS provider for Treasury and Risk Management, helping enterprises better manage cash, liquidity and financial risk, and account for and report on complex financial instruments and hedging activities.

For more information, visit www.reval.com or email info@reval.com.

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