Oxera notes a number of findings in this analysis, noting in particular:

• The effect of taxing intermediate transactions would be either to multiply the costs to end-users (such as end-investors and companies raising capital) and/or to reduce market making and therefore reduce liquidity—neither of which is in the interests of endusers.
• The extent by which taxing secondary market transactions in government debt will increase sovereign borrowing costs and reduce market liquidity could be greater than the Commission assumes—these impacts are not consistent with the objective of reducing the burden of sovereign debt costs.
• The effect of taxing repos would be to make many valuable transactions uneconomic, and to introduce inefficiency into the repo market itself, and inefficiencies into those activities that use repos as a mechanism to reduce their costs and/or risks—these costs would ultimately fall on end-users.
• Taxing derivatives will hit some hedging activities much harder than others, deterring some forms of prudent risk management—this means that the Commission’s assumption that the loss of derivatives trading will have no wider economic impact is less tenable.
• The effect of taxing transactions undertaken by pension funds, together with the effect of taxing intermediate transactions, would be to reduce the returns of pension products—this is not in the interests of people saving for their retirement.

Specifically regarding pensions, Oxera found that the impact of the FTT accumulates significantly over time for an actively managed pension fund, ultimately reducing the final pension by almost 8%.  This impact, Oxera noted, would “vary across different pension products, and potentially encourage funds to shift into untaxed investments, which may or may not be in the interests of consumers.”

Learn more about this report by downloading and reading it online here.

TABB Group notes that 500 buy-side firms will fall under the Category II mandate and that 75% of those firms, or 375 institutions, will fail to meet the deadline.  Noting that many risks in the lead-up to the deadline are avoidable, the report states that customer onboarding and testing are the most time-critical elements involved in new clearing arrangements.

TABB Group also identifies a number of questions emerging as the deadline approaches:

• Will there be a legal bottleneck as players rush to comply with regulation at the last minute?
• Will some market participants be temporarily locked out of the swaps market come June 10?
• Will investors have to find alternative ways to meet their investment objectives?
• How will buy side firms handle portfolio risk in the event of a major market disruption?

Furthermore, a separate report from Woodbine Associates notes that, “There is no time to waste for Category Two firms that expect to trade swaps after June 10….Category Two firms must rapidly select, register with, and put in place documentation with FCM, CCP and technology partners.”  The report also notes that systems integration must work flawlessly for these firms with ongoing transactions, and any issues or shortcomings must be identified and resolved before clearing large risk positions.  As Woodbine Associates observed, “The capabilities put in place today will dictate how well organizations are able to adapt to change and exploit opportunities in the future.”

Citi’s report, “The Rise of Liquid Alternatives & the Changing Dynamics of Alternative Product Manufacturing and Distribution,” predicts that assets managed in U.S. liquid alternative funds – which including hedge fund strategies and exchange traded funds – will jump 198% to $908 billion by the end of 2017.  Pensions & Investments has also reported that the percentage of global defined benefit plan assets that hedge funds represent will increase 5.3% by the end of 2017, compared to 4.2% at the end of last year.

Read the full Citi Prime Finance report online here.  Read more about the report from Pensions & Investments here.

• The international push lead by European Commissioner for Internal Market and Services Michel Barnier and others to limit the cross-border reach of Dodd-Frank swaps rules.
• MFA’s recent comment letter to the UK’s Financial Conduct Authority responding to its second consultation paper on implementation of the Alternative Investment Fund Managers Directive (AIFMD).
• MFA President and CEO Richard H. Baker’s op-ed published last month by Institutional Investor’s Alpha, addressing Mary Jo White’s recent confirmation as Chairman of the Securities and Exchange Commission (SEC) and outlining a short list of topics that the global hedge fund community hopes she will address as she assumes leadership of the agency.
• A recently submitted comment letter by MFA to the SEC on decimalization and a tick size pilot program.
• The release of two new educational infographics on Hedge Fund Fundamentals in April that outline how hedge funds are regulated both in the United States and the European Union.

Learn more about these stories by downloading and reading this month’s Policy Brief.  You can also take a look through the archives of the Policy Brief to read past issues.

Bloomberg Brief reported that the allocations were funded on April 1, according to an informational report issued by the pension fund.  The mandates all belong to the absolute return category for the fund.

According to the city, the pension system has a target allocation for hedge funds of 25% of total assets.  The hedge fund portfolio is structured to be diversified and include multiple managers and strategies, have low correlation to traditional market indices, to lower overall portfolio risk, and to reduce downside risk in bear markets.

Learn more about this story and more online from Bloomberg Brief.

The panel also focused on different ways that the JOBS Act will impact the hedge fund industry.  Once fully implemented by the Securities and Exchange Commission (SEC), the JOBS Act will remove the ban on general solicitation of private funds.

During the presentation, panelists discussed the timing of the implementation of the JOBS Act (which was due to be completed last summer), the effect on dual registrants, and what firms are currently doing to prepare.  Newell presented MFA’s perspective, hoping for swift resolution to the JOBS Act rules and noting their importance to MFA’s members and the industry as a whole.

Joining Newell on the panel was Victor Park, Principal & Founder, Alternative Assets; Marc D. Powers, Partner, BakerHostetler; and Jennifer Prosek, Managing Partner, Prosek Partners.

Learn more about the SALT Conference online here.