LONDON, UK–Managed Funds Association (MFA) endorsed the UK government’s proposed changes to its Short Selling Regulation (SSR) relating to sovereign debt and credit default swaps (CDS).
In a comment letter submitted to His Majesty’s Treasury (HM Treasury), MFA emphasized that the SSR review is a critical step toward strengthening the UK’s dynamic and attractive international financial services centre. MFA highlights that the high compliance cost of three requirements under the current SSR is unnecessary, given the depth and liquidity of the UK gilt market. MFA supports the UK Government’s proposal to eliminate:
- The cover requirement for short selling sovereign debt;
- The ban on uncovered sovereign CDS positions; and
- Low reporting thresholds for net short positions in sovereign debt and CDS.
“We commend the UK Government for proposing adjustments to SSR that will the enhance efficiency and competitiveness of UK capital markets and help further cement the UK as a leading international financial centre,” said Jillien Flores, Head of Global Government Affairs at MFA. “Robust, liquid gilt markets are critical for fueling the UK economy and enable alternative asset managers to effectively manage risk on behalf of their investors, including pensions. Sovereign debt and sovereign CDS requirements under the current SSR provide little discernible benefit and impair the ability of market participants to engage in these markets.”
Earlier this month, MFA and its members also offered views of the alternative asset management sector at HM Treasury’s industry roundtable on sovereign debt and CDS. MFA has been actively engaged throughout the SSR review process, including providing feedback to HM Treasury’s Call for Evidence on the existing SSR framework for equities. The UK government then published proposed targeted amendments to the SSR based on industry consultation, including improved modifications to equity short sale public disclosure and position reporting.
MFA’s letter is available 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 £3.2 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 the 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 hedge funds, credit funds, and crossover funds that collectively manage nearly £1.7 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.