MFA submitted a cover letter and white paper to each member of the Financial Stability Oversight Council (FSOC) on the protection of non-public, sensitive and proprietary information. MFA has become concerned over recent inspector general and press reports describing the improper use of private, sensitive data that certain regulators have collected for regulatory purposes and the gaps in internal controls at regulators to protect non-public information.
MFA strongly supports intelligent, well-informed and data-driven regulation of the U.S. securities and derivatives markets. MFA also consistently has endorsed the notion that regulators need appropriate levels of information about markets and their participants to make thoughtful policy decisions. In light of new Dodd-Frank Act authorities and information-sharing duties and obligations, MFA believes it is appropriate and necessary for regulators to review their existing policies, practices, and controls and to coordinate with fellow FSOC members now before an inadvertent leak occurs or a malicious attack is carried out.
MFA developed and submitted a white paper that provides a series of recommendations for increasing the robustness of policies and controls over sensitive, non-public information collected or shared as part of a regulator’s oversight of financial market participants and/or financial stability. While some of the specific recommendations are addressed to the Securities and Exchange Commission and the Commodity Futures Trading Commission – as the primary regulators of investment advisers, commodity pool operators and commodity trading advisors – the recommendations are broadly applicable and may be relevant for all members of FSOC. In the paper, MFA makes the following recommendations:
The cover letter to Treasury Secretary Jacob J. Lew accompanying the MFA white paper is available for reading and download. The cover letter sent to SEC Chairman Mary Jo White and CFTC Chairman Gary Gensler (copies were provided to each SEC and CFTC Commissioner) accompanying the white paper are also available for reading and download.
MFA sent similar cover letters to the other members of FSOC with the white paper.