Comment Letter Responding to SEC and CFTC’s Advance Joint Notice on Definitions Contained in Title VII of Dodd-Frank Wall Street Reform and Consumer Protection Act

MFA submitted a comment letter in response to the Advance Notice. In the comment letter, MFA expressed concern that because of the breadth of the swap dealer and security-based swap dealer definitions, those definitions may inadvertently capture non-bank customers entering into swaps for their own accounts that do not act as dealers and that Congress did not intend to regulate as dealers or banks. As a result, MFA suggested that the SEC and CFTC, instead, follow the SECs longstanding definition of dealer under the Securities Exchange Act of 1934, as amended. In addition, MFA encouraged the SEC and CFTC to create definitions of major swap participant and major security-based swap participant (together, MSPs) that are clear, objective and replicable. In that vain, MFA provided views on how cleared swaps and collateral posted should factor into the definition and provided specific principles that we suggested the SEC and CFTC take into account when crafting the prongs of the MSP definition related to defining substantial position, highly leveraged and substantialcounterparty exposure