MFA and AIMA Submit Joint Letter to CFTC on Further Proposed Cross-Border Guidance

February 06, 2013

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Topics: Commodity Futures Trading Commission CFTC, Cross-Border, swaps, duplicative regulation, Alternative Investment Management Association, AIMA, Dodd-Frank Act, prime brokers, hedge fund managers, U.S. person, interpretive guidance, market participants, Corporation, partnership, Limited Liability Company, LLC, Trust, joint-stock company, direct or indirect ownership, commodity pool, pooled accounts, collective investment vehicles, commodity pool operator, CPO, pension, estate, income tax, principal place of business test, investment manager, limited liability partnership, LLP, investment fund, ownership test, derivatives, OTC derivatives, over-the-counter derivatives, OTC derivatives market, international harmonization of regulations, regulatory framework, swap dealer, Major Swap Participant, msp, Securities and Exchange Commission, SEC, European Securities and Markets Authority, ESMA, European Parliament, Council of the European Union, central counterparty, CCP, trade repositories, mandatory clearing requirements, clearing, central clearing, systemic risk, Gary Gensler, Mary Schapiro, OTC derivatives reform, CPPSS-IOSCO, IOSCO, International Organization of Securities Commissions, European Union, EU, Hong Kong Monetary Authority, Hong Kong, Monetary Authority of Singapore, Singapore, MAS, foreign regulators, Dealer, buy-side market participants, registration, adviser registration, Office of the Comptroller of the Currency, OCC, majority ownership, Look Through, fund of funds, listed entity, Form CPO-PQR, de minimis, commodities, phase-in period, execution, G20, G20 commitments, transparency,
From: MFA, Stuart Kaswell; AIMA, Jiří Krόl


David Stawick, CFTC
Gary Gensler, Bart Chilton, Jill Sommers, Scott O’Malia, Mark Wetjen, CFTC

MFA and AIMA jointly submitted a comment letter to the Commodity Futures Trading Commission (CFTC) on its “Further Proposed Guidance Regarding Compliance With Certain Swap Regulations.”  In the letter, MFA and AIMA expressed appreciation for the CFTC’s proposed modifications to the “U.S. person” definition, but also expressed continued concern with the breadth of the definition and its application to non-U.S. funds.  In particular, MFA and AIMA urged the CFTC to provide equal treatment of funds and corporate entities by modifying the proposed “U.S. person” definition to:

  • Eliminate the “look-through” to all indirect investors, and
  • Apply only the tests in alternative prong (ii) to funds, specifically, the tests related to place of organization, majority direct ownership, and unlimited liability.

MFA and AIMA also asked the CFTC to clarify that:

  1. A fund’s principal place of business is its place of organization or incorporation,
  2. A fund may rely on representations from its investors at to the investors’ U.S. person status, and
  3. If it modifies the “U.S. person” definition in the future, it will give notice, an opportunity for the public to comment and one year for affected entities to comply with the relevant regulatory requirements.

Lastly, MFA and AIMA urged further coordination between the CFTC and other U.S. and international regulators to avoid duplicative regulation and to address issues related to the practical details of how substituted compliance will work in practice.