MFA Submits Letter to NFA on Proposed CPO/CTA Capital Requirements (with Lofchie Comment)
The Managed Funds Association ("MFA") submitted comments to the National Futures Association ("NFA") in response to its Notice to Members regarding "CPO/CTA Capital Requirement and Customer Protection Measures." In the letter, MFA expressed concern over the NFA-proposed capital requirements, stating that it cannot support the requirements. Among other reasons, MFA cited the following:
- the new requirements would not ensure greater protection of customer funds;
- substantial regulatory protections already exist; and
- new capital requirements would be costly and complicated to implement and monitor.
Furthermore, MFA expressed concern about the NFA proposal's requirement that an independent third party review and authorize a CPO's disbursement of pool funds, as such a requirement could be unduly burdensome, would hinder the investment and other operations of the pool, and could introduce additional risk into the system.
Lofchie Comment: The NFA proposal that advisors be subject to capital requirements seems like a vestige of former CFTC Chairman Gensler's ill-considered approach. A more rational philosophy of regulation should be considered.
See: Comment Letter.Related news: NFA Notice I-14-05: Request for Comments on CPO/CTA Capital Requirements and Customer Protection Measures Not Limited to CPO/CTA Members (January 30, 2014); NFA Notice I-14-03: Request for Comments Regarding CPO/CTA Capital Requirement and Customer Protection Measures (with Lofchie Comment) (January 23, 2014); NFA Town Hall on Capital Requirements for CTAs (with YouTube link) (March 19, 2014).