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 Derivatives Market Practices |
MFA has played an important role in improving market practices in the derivatives markets through collaboration with the major derivatives dealers and other industry participants. Over-the-counter (OTC) derivatives are of great importance to MFA Members as many of the funds they manage are active investors in these products. Over the last ten years, OTC derivatives have become a critical means by which funds manage the risk and returns of the assets in their portfolios in order to meet the objectives of their investors. MFA and its members have consistently supported and participated in industry efforts to improve the operational infrastructure and efficiency of the OTC derivatives markets.. These efforts can be broken down into three categories of initiatives:
- Industry Policy
- Standard Documentation Advocacy
- Education and Outreach
Recent initiatives include the following: | 6.15.2009 |  | MFA submitted a letter to the International Organization of Securities Commissions (IOSCO) in response to its Consultation Report on Unregulated Financial Markets and Products. In our letter, we assert that any regulatory measures that seek to affect the functioning of the CDS market and other OTC derivatives markets must be balanced against the significant benefits that these products bring to global capital markets and to the market participants who trade them. We agreed with IOSCO that the optimal framework to strike this balance is through industry initiatives, which are organized in coordination and cooperation with global regulators. | | 6.11.2009 | | MFA submitted a letter following a call on June 9, 2009 among MFA staff, MFA members, the SEC, CFTC, New York Fed, Federal Reserve Board, FDIC and OCC, as well as SIFMA regarding the standardization and clearing eligibility of OTC derivatives. This interagency regulatory group provided good feedback about the information and views that MFA and its members presented during the call. | | 6.2.2009 | | MFA, through its participation in the Operations Management Group (OMG), joined the Major Dealers in presenting a letter to global regulators establishing new commitments to address key concerns in the OTC derivatives markets. In particular, the letter commits that its signatories will maintain support of commercially viable centralized clearing platforms, universally report all OTC derivatives trades and promote sound business practices. MFA issued a press release announcing the new commitments identified in the letter. A plain-language summary and chart of the letter’s commitments were issued by its signatories. | | 2.6.2009 | | MFA submitted a letter to the Government Accountability Office (GAO) following its telephone interview on January 15, which was held in connection with the GAO’s examination of the risks and challenges presented by the credit default swap market. In the letter, MFA reiterated certain points discussed during the interview and provided answers to certain questions that were not asked due to time constraints. | | 10.31.2008 | | MFA, through its participation in the Operations Management Group (OMG), joined the 16 Major Dealers in presenting a letter to industry regulators that establishes a series of strategic roadmaps and seven high level goals to further improve front-to-back office processing of OTC derivatives and to mitigate risk across the OTC derivatives market. The letter reaffirmed the continued cooperation between the buy-side institutions of the OMG and the Major Dealers in confronting challenges posed by recent market events. The letter also addressed counterparty credit risk concerns by setting forth commitments regarding central counterparty clearing, electronic novation processing and collateral management. MFA issued a press release announcing the new commitments identified in the letter. | | 7.31.2008 | | MFA announced that it is joining the 17 major derivatives dealers as a signatory to a letter to global regulators that develops new commitments to improve operational efficiency across OTC derivatives, as well as commodities and foreign exchange markets and collateral management. Click here for a copy of the letter and click here for a copy of the supplement to the letter. | | 6.9.2008 | | MFA, ISDA and SIFMA delivered an implementation plan that they developed jointly to help enable buy-side market participants to operate consistently with the relevant goals outlined in the March 27th letter to the New York Fed. The implementation plan consists of three fundamental strategies: (1) communication and education, (2) facilitation and use of electronic confirmation and novation platforms, and (3) electronic confirmation matching improvement.
Click here for a copy of the implementation plan.
Click here for the Summary of the 2008 Industry Commitments.
Click here for the final agenda for the MFA, ISDA and SIFMA live session.
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Industry Pulse
MFA Calendar
Upcoming MFA Events:
MFA's Outlook 2009 will debut October 15-16, 2009 in New York as MFA’s premier hedge fund leadership conference.
June 22-24
MFA Members Click here to view presentations from the conference.
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