MFA and AIMA Submit Joint Letter to CFTC on Further Proposed Cross-Border Guidance (with Lofchie Comment)

The MFA and AIMA jointly submitted a comment letter to the CFTC on itsFinal Exemptive Order Regarding Compliance with Certain Swap Regulations (78 FR 858). MFA and AIMA expressed continued concern with the "breadth of the definition and its application to non-U.S. funds." In particular, MFA and AIMA urged the CFTC to provide equal treatment of funds and corporate entities by modifying the proposed "U.S. person" definition to "eliminate the 'look-through' to all indirect investors, and apply only the tests in alternative prong (ii) to funds, specifically, the tests related to place of organization, majority direct ownership, and unlimited liability."

The MFA and AIMA also asked the CFTC to clarify that:

1. A fund's principal place of business is its place of organization or incorporation,
2. A fund may rely on representations from its investors as to the investors' U.S. person status, and
3. If it modifies the "U.S. person" definition in the future, it will give notice, an opportunity for the public to comment, and one year for affected entities to comply with the relevant regulatory requirements.

Lofchie Comment: Consistent with the comments that I made about Dodd-Frank in the prior news item, here is the proof of my concern that the customers whom Dodd-Frank was supposedly intended to protect are trying to avoid being deemed U.S. persons so that they are not forced to be "protected." (In short, business is going to move out of the United States to avoid the burdens of Dodd-Frank. The damage done to the U.S. economy if the United States is no longer the global financial market place will be considerable over the long run and will not be easy to reverse.)

Click hereto view letter in full (links externally to MFA website).