Proposal will improve competitiveness and efficiency of the US financial system
Washington DC – Managed Funds Association (MFA) endorsed the Commodity Futures Trading Commission’s (CFTC) proposed Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants rule in a comment letter today.
MFA’s letter supports the CFTC’s efforts to provide a level playing field domestically and globally for swaps market participants by aligning its margin rules with the Basel Committee on Banking Supervision and the International Organization of Securities Commissions (BCBS-IOSCO) framework. The letter also agrees with the CFTC’s work to expand the scope of assets that qualify as eligible collateral for initial margin. The proposal accomplishes this by allowing securities issued by certain money market funds to be used as eligible initial margin collateral.
“MFA supports the CFTC’s proposed updates to swaps margin requirements. Aligning the U.S. with global swaps frameworks and expanding assets eligible to be used as initial margin collateral will improve the competitiveness and efficiency of the U.S. financial system,” said Bryan Corbett, MFA President and CEO.
The letter details how the proposed rule’s revised definition of “margin affiliate” will eliminate disparate treatment for seeded funds that puts them at a disadvantage domestically and globally. The letter also notes the negative consequences of the CFTC not finalizing the proposal, which include increased costs, settlement delays, tracking errors, and operational burdens.
The full letter can be found here.
About the Global Alternative Asset Management Industry
The global alternative asset management industry, including hedge funds, credit funds, and crossover funds, has assets under management of $4 trillion (Q4 2022). The industry serves thousands of public and private pension funds, charitable endowments, foundations, sovereign governments, and other global institutional investors by providing portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets.
About Managed Funds Association
Managed Funds Association (MFA), based in Washington, DC, New York, Brussels, and London, represents the global alternative asset management industry. MFA’s mission is to advance the ability of alternative asset managers to raise capital, invest, and generate returns for their beneficiaries. MFA advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. MFA has more than 170 member firms, including traditional hedge funds, credit funds, and crossover funds, that collectively manage nearly $2.2 trillion across a diverse group of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors to diversify their investments, manage risk, and generate attractive returns over time.