MFA submitted a comment letter in response to the FSBs Background Note on Shadow Banking. In our letter, we discussed the role of hedge funds in the financial system, noting that they generally are not part of the shadow banking system as defined by the FSB and that hedge funds do not pose systemic risk, at least currently. We discussed the structure of hedge funds and their financing arrangements to make the point that hedge funds generally do not engage in maturity transformation. We also explained that hedge funds are well regulated and subject to significant reporting and oversight requirements under the Dodd-Frank Act and the Alternative Investment Fund Manager Directive. Finally, we encourage the FSB to support the macro-prudential measures approach to regulation, which would allow the regulators to monitor the financial system as a whole and manage the systemic risks appropriately.