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MFA Submits Comment Letter to the SEC on its Proposed Rules to Expand the Definition of “Dealer” and “Government Securities Dealer”

MFA submitted a comment letter to the SEC in response to its proposed rule to redefine and expand the definitions of “dealer” and “government securities dealer.” MFA’s letter emphasizes that the rule would have unintended consequences for institutional investors and markets and calls on the Commission to exclude private funds and their advisers from the proposal. 

If adopted, the Proposal would require a wide range and large number of private funds and their advisers, who are already subject to Commission registration, examination, and significant reporting requirements, to dually register as a dealer or government securities dealer.

Many private funds, as a result of this rule, will reduce trading or possibly leave the market entirely. This will lead to reduced investment opportunities for pensions, foundations, and endowments. Greater market concentration will increase systemic risk for the U.S. financial system. The rule will reduce liquidity, harm price discovery, and increase the cost of capital for companies and the U.S. government.

MFA issued the following statement from MFA President and CEO Bryan Corbett:  

“Alternative asset managers are not broker-dealers, and our members are already registered with the SEC, which requires them to submit in-depth information on their activity. This rule would result in some alternative asset managers limiting their activity or exiting the fixed income and treasury markets altogether, harming both markets and pensions, foundations, and endowments that rely on alternative asset managers to deliver for their beneficiaries. If adopted as proposed, the rule would run counter to the Commission’s intentions by increasing concentration in the market, decreasing market resilience and stability, and leading to increased systemic risk.”