International

MFA continues to increase its advocacy and educational efforts outside of the U.S. as the alternative investment industry fosters a uniform global regulatory framework. MFA’s efforts include meetings with and outreach to non-U.S. regulators, policy makers and market participants to address regulatory and legislative initiatives that would affect the alternative investment industry.

In 2008, MFA entered into an alliance with its European counterpart, The Alternative Investment Management Association (AIMA). MFA and AIMA have established a framework for the development of a global voice for the hedge fund industry on issues of common interest such as an international convergence of sound practices and high standards of professional conduct.

MFA has also formed an International Affairs Advisory Committee, which engages in advocacy and educational efforts that focus on issues that affect access to markets and cross-border capital flows. Initiatives include meetings with international regulators and policy makers, participating in international conferences and meeting with international groups such as the International Monetary Fund and the World Bank.

Recent MFA initiatives on the international front have included the following:

7.9.2010		MFA submitted a letter to the European Commission in response to its Consultation Paper on Short Selling. In our letter, we recommend that: (i) any rules require that reporting to a regulator be non-public and fully protect the confidentiality of the information; (ii) any rules should be based on a de minimis reporting threshold for private reporting to regulators of at least 0.5%; (iii) if there is evidence showing that public disclosure is necessary and beneficial, any rules should only require regulators to make available to the public aggregated anonymised data on short selling using the information privately reported to them, but at a higher threshold (such as 2%); and (iv) any rules prohibiting uncovered or naked short selling of shares should apply where the investor has neither pre-borrowed, agreed to borrow, nor has reasonable grounds that he will be able to borrow the shares by the time of settlement.
7.9.2010		MFA submitted a comment letter in response to the European Commission’s (EC) Consultation Paper on Derivatives and Market Infrastructures. In our letter, MFA applauded the EC’s interest in considering differing market perspectives as it finalizes its draft legislative proposals and policies regarding central clearing, improved transparency and other aspects of the OTC derivatives market.  In addition, we expressed our general support of: (i) the bottom-up approach to the EC’s mandatory clearing obligation; (ii) the general approach specified in the consultation paper on organizational requirements and governance processes for European central counterparties (CCPs); (iii) the EC’s rule requiring each clearing member to distinguish and segregate in accounts with the CCP the assets and positions of that clearing member from those of its clients; and (iv) the EC’s principle regarding non-cleared OTC derivatives contracts being reported to a trade repository, but expressed concern regarding the options presented in the consultation paper.
6.3.2010		MFA submitted a letter to the Monetary Authority of Singapore (“MAS”) on June 3, 2010 in response to MAS’s Consultation Paper on proposed changes to the regulatory regime for fund management companies and exempt financial intermediaries.  In our letter, we support MAS’s efforts to foster long-term growth of the fund management industry in Singapore.  In addition, in our letter, we seek clarification and make recommendations on: (i) the application of the proposals to U.S.-based investment advisers that have a Singapore office or affiliate, where such office/affiliate confines its activities in Singapore to conducting research, providing analyses or providing related back office services; (ii) the proposed computation of “assets under management”; (iii) the requirement to employ two (2) full-time individuals with at least five (5) years of relevant experience who reside in Singapore; (iv) the imposition of risk-based capital requirements; and (v) the prohibitions on trade execution without compliance with certain requirements.
5.28.2010		MFA submitted comments to the Committee of European Securities Regulators (CESR) in response to its call for evidence on micro-structural issues of the European equity markets.  MFA provided comments on high frequency trading, sponsored access and co-location.  We believe these advancements in technology and trading have empowered investors, both institutional and retail, with more sophisticated and efficient methods to access the markets and execute their investment strategies globally.  In the process, these equity market developments have led to greater market liquidity and depth, tighter bid-ask spreads and lower transaction costs.  These changes also lower the cost of capital and enhance economic growth.
4.7.2010		MFA today expressed its support for Treasury Secretary Geithner’s renewed call for the European Union to participate in globally coordinated financial regulatory reform in a way that resists protectionist-driven initiatives.  Read MFA’s full statement here.  Click here to read the full text of Secretary Geithner's letter.
3.23.2010		MFA today expressed its support for Senator Charles E. Schumer's (D-NY) letter to Treasury Secretary Geithner calling for globally coordinated financial regulatory reform in a way that resists protectionist-driven initiatives.  Read MFA’s full statement here.  Click here to read the full text of Senator Schumer's letter.
3.11.2010		MFA today expressed its support for Treasury Secretary Geithner’s call for the European Union to participate in globally coordinated financial regulatory reform, specifically initiatives that directly impact the alternative investment industry.  Read MFA’s full statement here.  Click here to read the full text of Secretary Geithner's letter.
3.5.2010		As a global industry voice on regulatory reform, MFA today responded to the new short selling disclosure regime announced by Germany’s Federal Financial Supervisory Authority (BaFin).  MFA expressed support for the general approach taken by BaFin but registered concern for the lack of detail in reporting requirements and the potential additional costs that could be shouldered by investors.  Read the press release here.
3.2.2010		MFA today responded to the Committee of European Securities Regulators and Hong Kong Securities and Futures Commission’s proposed short selling disclosure regimes.
2.9.2010		International management consultancy Oliver Wyman published a report today that provides the first clear evidence that rules requiring public disclosure of short positions make it more expensive and difficult for all participants to invest in equity markets. The report finds that the public short sale disclosure regime in effect in the United Kingdom has caused: (i) bid-ask spreads for UK stocks subject to disclosure to widen by over 45%, (ii) total trading volume in affected UK stocks – including long trades – to decrease by 13%, and (iii) short selling liquidity to be impaired by approximately 20%. Together, these effects limit the ability of businesses to raise capital and create jobs, and raise costs for pension funds, retail funds, and other investors. Click here to read MFA's news release about the report.  Click here to read a description of the report.
2.1.2010		MFA submitted a letter to the UK House of Lords in response to a Call for Evidence from the Subcommittee regarding the European Commission’s Communications on ensuring safe and sound derivatives markets. In our letter, we: (i) discussed the benefits of the derivatives markets; (ii) noted that derivatives helped market participants to hedge their risk exposures during the worst months of the financial crisis; (iii) agreed that the European Commission’s approach to monitor and, when appropriate, to impose minimum collateral levels with respect to non-cleared derivatives transactions is the correct level of oversight; and (iv) encouraged the European Commission to coordinate its regulation and oversight of the derivatives markets with other regulators around the world to prevent market segmentation.
11.25.2009		MFA Responds to European Parliament Draft Report on AIFMD. MFA's statement responds to the draft report issued by Jean-Paul Gauzès, Rapporteur, Committee on Economic and Monetary Affairs, European Parliament, regarding amendments to the proposed directive on alternative investment fund managers.
10.9.2009		MFA submitted a letter to the Hong Kong Securities and Futures Commission (SFC) today in response to its Consultation Paper on increasing short position transparency. In our letter, we recommend that: (i) any disclosure to the SFC should be non-public and fully protect the confidentiality of the information; (ii) reporting should be based on a de minimis reporting threshold for private reporting to the SFC of at least 0.5%; (iii) if there is evidence available that public disclosure is necessary and beneficial, the SFC should only make available to the public aggregated anonymised data on short selling using the information privately reported to it; and (iv) if the cost of producing aggregate anonymised data is too high, the SFC should consider publicly disclosing anonymised versions of individual private reports of short positions, but at a higher threshold (such as 2%).
10.1.2009		MFA submitted a letter to the Committee of European Securities Regulators (CESR) today in response to its Consultation Paper on a Proposal for a Pan-European Short Selling Disclosure Regime. In our letter, we recommend that: (i) any proposed rules should require that reporting to a CESR member be non-public and fully protect the confidentiality of the information; (ii) any proposed rules should be based on a de minimis reporting threshold for private reporting to regulators of at least 0.5%; (iii) if there is evidence showing that public disclosure is necessary and beneficial, any proposed rules should only require regulators to make available to the public aggregated anonymised data on short selling using the information privately reported to them; and (iv) if the cost of producing aggregated anonymised data is too high, CESR should consider recommending that regulators publicly disclose anonymised versions of individual private reports of short positions, but at a higher threshold (such as 2%).
9.22.2009		MFA released its white paper on the European Commission’s Proposed Directive on Alternative Investment Fund Managers. MFA’s white paper provides a comprehensive analysis of the key provisions of the Directive, including: (i) restrictions on non-EU fund managers managing EU-based funds or marketing to EU investors; (ii) limitations on the ability of fund managers to delegate portfolio management and risk management outside of the EU; (iii) limitations on the ability of funds to use non-EU service providers, such as administrators and prime broker custodians; and (iv) leverage limitations and capital requirements. The white paper also includes a discussion of the challenges that these and other provisions of the Directive will present for the hedge fund industry. The white paper is intended to help educate MFA members, policy makers and regulators on the key provisions of the Directive and will be an indispensable tool as MFA engages with policy makers to help them develop an efficient and effective regulatory framework that includes monitoring and reducing systemic risk and promoting efficient capital markets, market integrity, and investor protection.
9.9.2009		MFA submitted a letter to the EU Economic and Financial Affairs, and International Trade Sub-Committee of the UK House of Lords today in response to a Call for Evidence from the Subcommittee regarding the European Commission’s Directive on Alternative Investment Fund Managers. In our letter, we: (i) stated our view that regulation of advisers to alternative investment funds is the appropriate general approach to regulation for the alternative investment industry; (ii) discussed MFA concerns with several provisions of the Directive, including the effective prohibitions on non-EU fund managers managing European funds or marketing non-European funds to European investors; and (ii) stated our concern that several provisions of the Directive seek to establish regulation of market-wide issues solely in the context of alternative investment fund managers, rather than on a market-wide basis, which we believe would be the more appropriate and effective approach to address market-wide issues.
9.4.2009		MFA submitted a letter to the Committee of European Securities Regulators today in response to its Call for Evidence on mutual recognition with non-European Union jurisdictions. In our letter, we: (i) recommend that policy makers and regulators continue to work toward the goal of enhancing international coordination and harmonization with respect to their regulatory reform efforts; (ii) express concern with European requirements to clear European-linked credit default swaps through a central counterparty that is located within the EU; and (iii) recommend that policy makers coordinate efforts with respect to regulation of hedge funds, consistent with the principles in the G-20’s post-London Declaration and the International Organization of Securities Commissions’ Hedge Funds Oversight Final Report.
6.22.2009		MFA Issued a Response to Today's Release of The IOSCO Technical Committee paper, Hedge Fund Oversight: Final Report
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.
6.12.2009		MFA submitted a letter to the International Organization of Securities Commissions in response to its consultation report on “Policies on Direct Electronic Access” (DEA). In our letter, we request that any guidance issued by IOSCO on DEA include recommendations regarding market and intermediary confidentiality safeguards and controls to protect customer trade data and to assure investors that the recipients of such information would use it exclusively for regulatory purposes. We also recommend that markets and intermediaries should have flexibility in determining the appropriate method of regulation for each type of DEA depending upon their own regulatory and technical capabilities and legal requirements.
6.10.2009		MFA’s international perspective on regulatory reform necessitates education and advocacy not only with policy makers in the United States, but also with the G-20, the EU, the Financial Stability Board, the International Organization of Securities Commissions (IOSCO), as well as national agencies. MFA Members Only may click here to view recent events that MFA has undertaken in pursuing its overall international strategy. Additionally MFA Members Only may click here to read an extensive analysis of the EU Parliamentary elections (June 4-6) that MFA commissioned in conjunction with one of its consultants. Included therein are some of the next steps that will be undertaken in organizing the new Parliament and its Committees as well as the European Commission.
5.8.2009		MFA submitted a letter to the U.K. Financial Services Authority in response to its proposed short selling disclosure measures, recommending that short positions be privately reported to the FSA.
5.4.2009		MFA submitted comments to the IOSCO Technical Committee in response to its Consultation Report, Regulation of Short Selling. In the letter, MFA commends the Technical Committee’s four principles for the regulation of short selling and offers certain recommendations to improve market stability and investor confidence.
4.30.2009		MFA submitted a written response to the IOSCO Consultation Report on Hedge Funds Oversight. MFA’s comments focused on four key areas: discussing the importance of the hedge fund industry to capital markets; clarifying misconceptions about the industry contained in the Consultation Report; discussing key industry initiatives that help mitigate risk; and setting out MFA’s position on systemic and prudential regulatory reform.
4.29.2009		MFA Responds to European Commission's Proposed Directives for Alternative Investment Fund Managers.
4.2.2009		MFA espouses smart approach to regulatory reform as G-20 concludes
3.26.2009		MFA submits a letter to the Australian Treasury requesting they support legislative and regulatory relief to eliminate the uncertainties in the application of certain Australian tax laws as they apply to many foreign investment funds, including those managed by many MFA members. In the letter, MFA emphasized that these uncertainties potentially act as an ongoing impediment to foreign investment in Australian capital markets.
1.15.2009		Today, The Group of Thirty (G30) released a report entitled, Financial Reform: A Framework for Financial Stability. Click here for a list of recommendations from the G30 Report. The stated purposed of the G30 Report was to make recommendations on ways to redefine the scope of prudential regulation; reform the structure of prudential regulation; improve governance, risk management, regulatory policies and accounting practices and standards; and recommend improvements in transparency and financial infrastructure arrangements. The G30 Report specifically addresses hedge funds and includes recommendations on registration, reporting and disclosure. For larger funds, it suggests standards for capital, liquidity and risk management. The Report urges international consistency.
1.9.2009		MFA submitted a letter to the U.K. Financial Services Authority responding to its proposed temporary short selling measures. The FSA has proposed to allow its short selling ban to expire and extend short position disclosure requirements to June 30, 2009.
12.23.2008		MFA sent a letter to the IOSCO Technical Committee Short Selling Task Force providing comments to regulatory approaches to short selling. The focus of the Task Force is to develop principles for the regulation of short selling to establish a common international approach.
10.28.2008		MFA Hosts Forum with Mr. Tony Lomas, Administrator, Lehman Brothers International Europe (LBIE) Insolvency to Address MFA Members in New York. Click here for our news release.
10.14.2008		MFA and AIMA respond to Italian Finance Minister Giulio Tremonti remarks that Italy may push for the abolition of hedge funds.
10.13.2008		MFA sent a letter to the Governor of the Bank of England stating that MFA and its members are extremely concerned that the Administrators of LBIE are setting out on a proposed course of action that threatens to undermine market confidence and liquidity with consequential damage to both the alternative investment industry and the global capital markets. An MFA news release about the letter can be viewed here.
6.18.2008		MFA has returned from an historic trip to Tianjin, China. MFA and CME Group (CME), a Strategic Partner member, jointly arranged the trip to meet with Chinese government officials, policy makers and financial services representatives. On June 10 and 11, MFA and CME co-sponsored a conference with the Tianjin Municipal People’s Government and China Foreign Exchange Administration Magazine entitled, “Global Markets and the Role of Alternative Investments.”
5.29.2008		MFA submits a comment letter to the Canadian Securities Administrators on Canada’s registration reform proposal.