The European Association for Investors in Non-Listed Real Estate Vehicles (INREV), an industry trade body, is lobbying European policymakers to reduce the complexity and cost of the European Market Infrastructure Regulation (EMIR) for real estate managers.
In a consultation response, INREV said the bill is placing a disproportionate burden on real estate managers and other so-called “non-financial firms” that engage in minimal trading but must still meet the full scope of the regulation.
The EMIR requires firms to trade over-the-counter (OTC) derivatives through exchanges and be cleared by banks, primarily as a means to shed light on the opaque derivatives markets. European policymakers are in the process of reviewing the three-year-old law.
INREV said smaller managers especially are having difficulty meeting the costs of the bill – which requires GPs to regularly pull data held by trade repositories and convert it into a format that is consumable.
If successful, INREV’s lobbying efforts may prove fruitful for the wider private funds community. GPs subject to the Alternative Investment Fund Managers Directive (AIFMD) are classified as financial counterparties under EMIR and thus subject to the full array of the bill’s requirements.
To relieve the reporting burden, INREV proposes a single-sided reporting system in which regulators collect the trading data directly from clearing houses such as banks, or exempt real estate managers buying and selling interest and foreign exchange rate swaps below a certain level.
INREV director of public affairs Jeff Rupp reportedly said the trade body agreed with the need for more transparency on derivative trading but is “convinced that the current regime is unnecessarily complex and burdensome.”
“We hope the [European] Commission will remedy this given the relatively small potential impact real estate fund managers have on systemic risk,” said Rupp.