MFA supports CFTC proposal to end duplicative registration for private fund managers

Proposal will reduce regulatory overlap and provide lasting certainty for private fund managers
Washington, D.C. — MFA strongly supports the Commodity Futures Trading Commission’s (CFTC) proposal to eliminate duplicative registration requirements for certain private fund managers in a letter submitted yesterday. The proposal would codify existing CFTC staff relief and restore a registration exemption the CFTC rescinded in 2012. 
“Duplicative registration creates more burden without better oversight,” said Jennifer Han, MFA Chief Legal Officer and Head of Global Regulatory Affairs. “The CFTC’s proposal is a smart step toward a more coherent U.S. regulatory framework. Making this exemption permanent will provide managers lasting certainty and reduce costs for investors, including pensions, foundations, and endowments.” 
The exemption would apply to managers that are already registered with and regulated by the Securities and Exchange Commission (SEC) and operate privately offered funds limited to sophisticated investors. Requiring these firms to also register with the CFTC as commodity pool operators and become members of the National Futures Association creates duplicative, expensive compliance obligations with little corresponding benefit.  The proposal appropriately eliminates the manager-level duplication while preserving the CFTC’s critical authority to oversee derivatives markets, monitor market activity, and police fraud, manipulation, and other misconduct. 
MFA recommends targeted changes to help managers transition smoothly to the permanent exemption and ensure that relying on it does not trigger new requirements. MFA’s recommendations include: 

Avoid forcing existing funds to offer special redemptions. Moving to the exemption does not change a fund’s strategy, portfolio, governance, or liquidity terms and should not require a special redemption offer. 


Prevent new trading restrictions. Codifying the exemption should not cause large investors to have a fund’s positions counted against their own position limits when nothing about the fund’s trading or ownership has changed. 


Preserve existing treatment for funds of funds and foreign-exchange trading. Funds should not lose existing regulatory treatment simply because their manager moves from staff relief to the new exemption. 


Keep investor eligibility standards consistent. The final rule should preserve the current standard for sophisticated investors and accommodate employee investment funds. 


Provide an orderly transition. Existing staff relief should remain in place until the permanent exemption is fully operational so managers do not have to reverse actions they have already taken or temporarily re-register. 

Read the full letter here. 
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About the global alternative asset management industry
The global alternative asset management industry — including hedge funds, private credit funds, and hybrid funds — serves thousands of public and private pension funds, charitable endowments, foundations, and other global institutional investors. The industry provides portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets throughout the economic cycle.
About MFA
Managed Funds Association (MFA), based in Washington, D.C., New York City, Brussels, and London, represents the global alternative asset management industry. MFA’s mission is to advance the ability of alternative asset managers to raise capital, invest it, and generate returns for their beneficiaries. MFA advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. MFA has more than 180 fund manager members, including traditional hedge funds, private credit funds, and hybrid funds, that employ a diverse set of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors diversify their investments, manage risk, and generate attractive returns throughout the economic cycle.
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