Much has been written about the possible implications of recent regulations on companies that use derivatives to hedge foreign exchange, interest rate, and other risks. Shortly after the Dodd-Frank Act passed in 2010, corporate treasurers began voicing concerns about how the law would affect their derivatives programs. Non-financial institutions are exempt from many of the key provisions, but that doesn't mean they won't feel an impact. Treasurers feared that Dodd-Frank, in conjunction with Basel III and other recent regulatory changes around the world, would increase both derivatives prices and the complexity of hedging financial risks.

For the past three years, hands have been wrung and keyboards have clicked to the beat of the war drum, sounding an alarm about the problems that the regulations might create the market. Nevertheless, little time has been spent investigating how regulations are actually affecting derivatives end users. That's what Treasury & Risk set out to do this fall in a research project sponsored by PwC. We polled 196 Treasury & Risk readers to determine whether their fears about Dodd-Frank and other derivatives regulations have come to fruition.

We found that hedging is costing companies more and is consuming more staff time than in years past. As a result, some derivatives end users are looking into alternatives to over-the-counter (OTC) trading, while others are reducing the volume of transactions they engage in or changing the types of derivatives they use. However, very few organizations are moving away from using derivatives as a hedge for their financial risks.