European non-listed funds body Inrev has called on the European Commission to reduce the complexity and cost of the European Market Infrastructure Regulation (EMIR) for real estate fund managers.
European non-listed funds body Inrev has called on the European Commission to reduce the complexity and cost of the European Market Infrastructure Regulation (EMIR) for real estate fund managers.
The Commission is currently reviewing its regulation on over-the-counter derivatives, central counterparties and trade repositories. In real estate investment this most commonly applies to the use of interest and foreign exchange rate swaps by fund managers.
In response to a public consultation, Inrev said the rules are 'particularly punitive' for smaller fund managers who often lack the resources to ensure full compliance.
Checking repository data and converting it into a format that is easy for non-financial counterparties (NFCs) to use and understand can lead to ‘substantial costs’, according to fund managers consulted by Inrev.
To reduce the burgen for smaller fund managers, Inrev is proposing the introduction of a single-sided reporting system for NFCs, meaning only one party to the transaction would need to report it. This would result in regulators still being able to access the necessary data on trades from the financial counterparty, usually a bank, while relieving real estate fund managers of the reporting duty.
Jeff Rupp, Inrev’s director of public affairs, said: 'We don’t dispute regulators’ need to receive data about derivative trades. However, we are convinced that the current regime is unnecessarily complex and burdensome.'
He added: 'We hope the Commission will remedy this given the relatively small potential impact real estate fund managers have on systemic risk.'
