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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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West Palm Beach (HedgeCo.net) – In testimony before the House Financial Services Subcommittee; “Perspectives on Hedge Fund Registration”, the Managed Funds Association (MFA) announced its support for the new push for mandatory registration of managers with the SEC.
"Though hedge funds were not the cause of the ongoing problems in our financial markets and our economy, MFA and our members share the commitment of policy makers to enact measures that will help restore stability to our markets, strengthen financial institutions and restore investor confidence." Richard H. Baker, MFA President and CEO, said, "We believe supporting mandatory registration for investment advisers is just one of the many important steps that can be taken towards these mutually shared goals."
Baker’s testimony stressed that while hedge funds are important to the capital markets and the financial system, the relatively small size and scope of the industry, with approximately $1.5 trillion in assets under management, did not pose significant systemic risk. He also stressed that hedge funds are substantially less leveraged than banks, have outperformed the overall market and have not sought any federal assistance.
“A registration framework that overwhelms the resources, technology and capabilities of regulators will not achieve the intended objective, and will greatly impair the ability of the regulator to fulfill their existing responsibilities, as well as their new responsibilities.
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Reuters – A U.S.-based trade group for hedge funds has urged the Bank of England to step in and speed up the freeing up of assets frozen in the collapse of Lehman Brothers Holdings Inc, saying it has become "an issue of very substantial systemic significance."
Richard Baker, a former U.S. congressman who heads the Managed Funds Association (MFA), said the lock-up of Lehman assets threatens British prime brokerage businesses and "will exacerbate systemic risks if not handled properly."
He made the plea in a letter dated Oct. 13, sent to the British central bank’s governor on the eve of a meeting between the administrators of Lehman Brothers International (Europe) (LBIE) and UK regulators.
Baker also said the current process is adding more uncertainty to global markets and that expediting the return of assets will give the market "a much needed boost of liquidity and confidence."
West Palm Beach (HedgeCo.Net)- The Managed Funds Association (MFA) and the Coalition of Private Investment Companies (CPIC) called on SEC Chairman Christopher Cox in a letter to not extend the emergency order on short selling beyond the announced expiration date.
"While we recognize that the financial sector is undergoing an extraordinarily difficult period," Richard H. Baker, MFA President and CEO, said, "we believe that these difficulties are the result of poor fundamental conditions and not a mysterious conspiracy or, more to the point, the inadequacy of current rules related to short selling."
"Such action would severely burden short selling activity, which the SEC itself repeatedly has acknowledged plays a vital role in the stability of securities markets." James S. Chanos, CPIC Chairman said, "Restrictions on short sales distort the fundamentals that drive market prices and are, in the long run, counter-productive because they remove liquidity and healthy skepticism from the marketplace."
The current expiration date is 11:59 pm on July 29, 2008.
CPIC is a coalition of private investment companies whose members and associates are diverse in both size and investment strategies managing or advising an aggregate of over $100 billion in assets.
MFA members represent the majority of the largest hedge fund groups in the world who manage a substantial portion of the approximately $2 trillion invested in absolute return strategies. MFA is headquartered in Washington, DC, with an office in New York.
West Palm Beach (HedgeCo.Net)- The Managed Funds Association MFA and CME Group (CME), a Strategic Partner member, recently arrived back from a jointly arranged trip to meet with Chinese government officials, policy makers and financial services representatives.
The MFA and CME co-sponsored a conference, "Global Markets and the Role of Alternative Investments" was held in June with the Tianjin Municipal People’s Government and China Foreign Exchange Administration Magazine.
"The conference agenda helped us to continue a dialogue about the important role of alternative investments in the capital markets and to strengthen relationships in China as its economy and financial markets grow." Richard H. Baker, MFA President and CEO, said.
Members who participated in the conference included; Citadel Investment Group, L.L.C.; Fairfield Greenwich Group (FGG); Harbinger Capital Partners Funds; Moore Capital Management, LLC; Tudor Investment Corporation; the D.E. Shaw Group; Paulson & Co., Inc.; and S.A.C. Capital Advisors, LLC.
"MFA’s visit to China is part of its ongoing international outreach with policy makers and its mission to provide information about the global alternative investment industry." MFA said.
MFA is the voice of the global alternative investment industry. Its members include professionals in hedge funds, funds of funds and managed futures funds. MFA Members represent the majority of the largest hedge fund groups in the world who manage a substantial portion of the approximately $2 trillion invested in absolute return strategies.
