Financial Trade Associations Urge Senate Leaders to Exclude MODA from any Budget Reconciliation Process
In a joint letter, industry trade associations (the "associations") asked U.S. Senate Majority Leader Senator Charles E. Schumer and Minority Leader Senator Mitch McConnell not to include proposed legislation titled the Modernization of Derivatives Tax Act of 2021 ("MODA") in any budget reconciliation process.
The proposed legislation would create a single tax regime for all derivatives, which would require mark-to-market treatment, source gains and losses to the taxpayer's country of residence, and tax derivatives at ordinary income rates. In the letter, the associations expressed concern that the complexity, uncertainty, and costs of the proposed legislation could discourage investors from participating in the derivatives market, which would impact those who rely on liquid and efficient markets for risk management purposes. The associations stated that MODA "would dramatically upend the tax treatment of derivatives."
The signatories to the letter include FIA, Commodity Markets Council, Alternative Investment Management Association, Managed Funds Association, Investment Company Institute, SIFMA, SIFMA Asset Management Group, FIA Principal Traders Group, U.S. Chamber of Commerce, and ISDA.