Managed Funds Association (MFA) submitted a comment letter to the U.S. Securities and Exchange Commission (SEC) calling for the proposed custody rule to be withdrawn and only re-proposed after addressing fundamental flaws with the proposal and conducting a thorough cost-benefit analysis. MFA’s letter highlights concerns regarding the proposed amendments and their potential negative impact on various financial markets. Specifically, MFA addresses the possible disruption they may cause to the financial market and the fundamental alteration they could bring to transaction processes.
MFA emphasizes that the Proposal to extend safekeeping requirements to all asset classes lacks evidence of widespread weaknesses or risks in current custodial practices for traditional assets. The letter highlights the SEC’s demand for custodial services that are presently unavailable or limited, while also requiring compliance within a twelve-month timeframe. MFA argues that the broad nature of the Proposal will make investing in many traditional, long-standing asset classes challenging, more expensive, and, in certain instances, impracticable to sustain. Therefore, MFA implores the SEC to withdraw proposed amendments to Custody Rule.