MFA Urges New CFTC Chair to Streamline Regulations
"Eliminating needlessly duplicative registration and compliance requirements that exceed the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ('Dodd-Frank' or the 'Dodd-Frank Act') would have an immediate benefit to private fund investors."
MFA Letter to CFTC Chair Michael Selig
"Eliminating needlessly duplicative registration and compliance requirements that exceed the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ('Dodd-Frank' or the 'Dodd-Frank Act') would have an immediate benefit to private fund investors."
MFA Letter to CFTC Chair Michael Selig
In a letter to the new CFTC Chair Michael Selig, the Managed Funds Association ("MFA") recommended a set of regulatory priorities to reduce duplicative regulations, harmonize efforts with the SEC, and improve market efficiency.
The MFA recommended that the CFTC review rules that impose unjustified costs on market participants and eliminate overlapping requirements that exceed the mandates of the Dodd-Frank Act.
Specifically, the MFA recommended the following:
- Codify CPO/CTA Exemptions. The MFA commended the recent reinstatement of the "QEP Exemption" via Staff Letter 25-50 and urged the Commission to formalize this relief through rulemaking. The MFA argued that the 2012 rescission of the exemption was "ill-conceived" and that subjecting SEC-registered advisers to duplicative CPO/CTA regulation creates unnecessary burdens without added benefit.
- Invoice Spread Trading. The MFA recommended that the Commission facilitate the full electronic trading of invoice spread packages. The MFA explained that "outdated designated contract market ... rules [currently] prohibit" these transactions on "swap execution facilities ... despite strong market demand" and called for targeted no-action relief or direction to exchanges to allow for more competitive and transparent trading.
- Cross-Margining Expansion. The MFA supported the recent proposal regarding cross-margining between the CME and FICC but urged the Commission to expand availability to "indirect participants" and other asset classes. The MFA noted that broadening cross-margining would reduce margin costs, enhance liquidity, and "support the U.S. Treasury clearing initiative."
- Audit Requirements. The MFA requested that the CFTC work with the SEC to allow, in limited circumstances, an extended fiscal year audit for funds that launch or close mid-year. The MFA contended that requiring a separate audit for a "stub period" of less than 90 days imposes unnecessary expenses on investors.
- Form PF/PQR Reform. The MFA urged the Commission to partner with the SEC to streamline Form PF/PQR, returning it to its statutory purpose of monitoring systemic risk. The MFA argued that recent amendments have caused the form to drift beyond its mandate and should be revised to focus on relevant data while reducing burdens on reporting advisers.
- Data Security. The MFA called on the Commission to enhance its policies for protecting confidential intellectual property and sensitive data. The MFA suggested that the Commission should utilize subpoenas when seeking highly confidential information, adopt tiered security procedures to prevent "cyberespionage," and limit data collection to "need to have" rather than "nice to have" information.