The Managed Funds Association (MFA) and the Alternative Investment Management Association (AIMA) submitted a letter to the Securities and Exchange Commission (SEC) in response to its “Proposed Rules; Proposed Interpretations on “Cross-Border Security-Based Swap Activities; Re-Proposal of Regulation SBSR and Certain Rules and Forms Relating to the Registration of Security-Based Swap Dealers and Major Security-Based Swap Participants” (Proposed Rules). In the letter, MFA and AIMA recognized the differences between the Proposed Rules and the Commodity Futures Trading Commission’s (CFTC) final cross-border interpretive guidance, and the associations urged continued harmonization with the CFTC and other regulatory authorities with respect to the extraterritorial scope of all these regimes. In addition, in the Proposed Rules, the SEC used the concept of a “transaction conducted within the United States” to determine which transaction-level requirements apply to market participants, including private funds. MFA and AIMA expressed concern that this standard did not incorporate any materiality threshold, and that, in practice, it may be difficult for a non-U.S. market participant to know whether it has engaged in relevant activity within the United States or to obtain a representation from its counterparty as to the counterparty’s activities within the United States. Lastly, MFA and AIMA generally supported the SEC’s proposed substituted compliance approach, but asked the SEC to allow market participants greater flexibility to seek substituted compliance in respect of all applicable transaction-level requirements.