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New York (HedgeCo.net) – Richard H. Baker, President and CEO of the Managed Funds Association (MFA) wrote a letter to MFA members this afternoon, highlighting today’s announcement by the Obama Administration requiring all advisers to hedge funds and other private pools of capital, including private equity and venture capital funds, to register with the Securities and Exchange Commission (SEC).
Baker highlights how the Administration’s proposed legislation would:
* eliminate the private adviser exception in the Investment Advisers Act and require hedge fund managers and other investment advisers to private investment pools with at least $30 million in assets under management to register with the SEC;
* eliminate the exemption from registration in the Advisers Act for certain commodity trading advisors registered with the CFTC if the commodity trading advisor acts as an investment adviser to a private fund (defined as a company that would be an investment company under the Investment Company Act of 1940 but for the exceptions contained in Section 3(c)(1) or Section 3(c)(7));
* give the SEC authority to require investment advisers to maintain records and submit reports of information relating to both the adviser and funds it manages, in order to allow for the supervision of systemic risk by the Board of Governors of the Federal Reserve and the Financial Services Oversight Council, and to provide such information to the Board and Council. The reported information must include at least, for each private fund, the amount of assets under management, use of leverage (including off-balance sheet leverage), counterparty credit risk exposures, trading and investment positions, and trading practices. Each adviser must maintain records of such information and make them available to the SEC upon request, and would be subject at any time to periodic, special, or other examinations by the SEC. Information provided by the SEC to the Board or Council would be kept confidential.
* give the SEC authority to require investment advisers to provide reports, records and other documents of private funds to investors, prospective investors, counterparties, and creditors, for the protection of investors or the assessment of systemic risk.
* permit the SEC to keep confidential any information in reports required to be filed with the SEC, except pursuant to requests from Congress or other federal agencies
* provide the SEC with the authority to define the term ‘client’ differently for different purposes of the Advisers Act and clarify other aspects of the SEC’s rulemaking authority with respect to registered investment advisers.
Click here to read the Administration’s press release announcing the proposed legislation.
HedgeCo.net (West Palm Beach) – Press Release – Hedge fund, funds of funds and managed futures funds group, the Managed Funds Association (MFA) has commended the working group paper, “Report to the Supervisors of the Major OTC Derivatives Dealers on the Proposals of Centralized CDS Clearing Solutions for the Segregation and Portability of Customer CDS Positions and Related Margin,” which was submitted to industry regulators on June 30, 2009.
"The efforts of the special working group and the Report are both comprehensive and timely." Richard H. Baker, MFA President and CEO, said, "MFA has been a strong proponent in advocating collateral segregation, portability of trades and direct and indirect buy-side access to centralized clearing. We remain committed to working with industry regulators, industry working groups such as the Operations Management Group, and other trade associations on the next steps toward providing such access."
The report was written by a special working group of eight dealers, four MFA members and four other buy-side market participants, addresses key concerns raised by supervisors and legislators globally, to analyze the various U.S. and European CDS clearing solutions with respect to the issues of customer margin segregation and portability of cleared customer CDS positions.
MFA fully endorses the collaborative efforts with industry regulators to support commercially viable centralized clearing platforms and to promote sound business practices.
MFA members include the vast majority of the largest hedge fund groups in the world who manage a substantial portion of the approximately $1.5 trillion invested in absolute return strategies. MFA is headquartered in Washington, with an office in New York. For more information, please visit: www.managedfunds.org
West Palm Beach (HedgeCo.net) – Global alternative investment industry voice, The Managed Funds Association (MFA) announced that it is joining the major derivatives dealers (the Major Dealers) in presenting a letter to global industry regulators. The letter establishes new commitments addressing key concerns raised by global legislators such as the G20, European Commission and the U.S. Department of Treasury.
MFA members are professionals in hedge funds, funds of funds and managed futures funds, as well as industry service providers. The association first joined the Major Dealers in presenting a letter to global regulators detailing operational targets and other industry commitments in March 2008.
The letter outlines a firm commitment towards strengthening the over-the-counter (OTC) derivatives infrastructure under the auspices of the OMG and its constituents and partners, including the newly formed Board Oversight Committee (IBOC) of the International Swaps and Derivatives Association (ISDA). MFA is dedicated to continuing its collaboration with global regulators, the Major Dealers, buy-side institutions and service providers to reduce risk and improve market infrastructure and practices across OTC derivatives and other financial products.
Richard H. Baker, MFA President and CEO, said, “ MFA , on behalf of the alternative investment industry, is committed to proactively developing and advancing these critical commitments for reducing counterparty and systemic risks and improving operational efficiency in OTC derivatives processing. MFA fully endorses the collaborative efforts with global regulators to support commercially viable centralized clearing platforms, to universally report all OTC derivatives trades and to promote sound business practices. MFA considers today’s letter to be an important step forward for OTC derivatives markets and looks forward to continuing our participation in the design of future steps.”
MFA and its co-signatories are committed to implementing changes to risk management, processing and disclosure that will significantly transform the risk profile of these important financial markets. The OTC derivatives markets provide important flexibility in terms of products and execution and will benefit from a strengthened infrastructure.
Commitments to reduce systemic risk in the OTC derivatives markets include:
Implementing data repositories for non-cleared transactions in the OTC derivatives markets to ensure appropriate transparency and disclosure, and to assist global supervisors with oversight and surveillance activities.
Clearing for OTC standardized derivative products.
Enabling customer access to clearing through either direct access as a clearing member or via indirect access, including the benefits of initial margin segregation and position portability.
Delivering robust collateral and margining process, including portfolio reconciliations, metrics on position and market value breaks, and appropriate dispute resolution mechanics.
Updating industry governance to be more inclusive of buy-side participants through collaborative partnerships among the Major Dealers, MFA and other trade associations. Continuing to drive improvement in industry infrastructure, as well as engage and partner with supervisors, globally, to expand upon the substantial improvements that have developed since 2005.
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