Comment Letter on Proposed Regulation for Ownership Limitations and Governance Requirements for Security-Based Swap Clearing Agencies, Security-Based Swap Execution Facilities, and National Securities Exchanges With Respect to Security-Based Swaps Under Regulation MC

MFA submitted a supplemental comment letter to the SEC in response to its reopening of the comment period on its proposed Ownership Limitations and Governance Requirements for Security-Based Swap Clearing Agencies, Security-Based Swap Execution Facilities, and National Securities Exchanges With Respect to Security-Based Swaps Under Regulation MC. In our letter, we requested that the SEC: (i) affirmatively mandate that all governing bodies of security-based swap clearing agencies (SBSCAs), national securities exchanges and security-based swap execution facilities (collectively, SBS entities), include non-dealer, customer representatives; (ii) affirmatively mandate that SBS entities include balanced representation from a number of different stakeholder groups, including customers, SBS entity management and independent directors; and (iii) expressly prohibit any group from constituting a controlling majority. We responded to arguments from other commenters that there should continue to be dealer control of risk management committees (RMCs) by explaining how customers, SBS entity management and independent directors have necessary expertise and aligned incentives. We supported requiring the Board of each SBS entity to review and re-examine for conflicts of interest any decision that the RMC approves.

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