MFA Submits Comment Letter to the SEC on SBSEFs and SBS Execution

On June 10, 2022, MFA submitted a comment letter to the SEC on its proposed rules that would create a regime for the registration and regulation of security-based swap execution facilities (SBSEF) and address other issues relating to security-based swap (SBS) execution under the Securities and Exchange Act of 1934.

MFA generally supports the Proposed Rule and believes that an appropriately structured regulatory regime with respect to SBSEFs will enhance the integrity of SBS markets and facilitate their role in promoting secure, liquid and properly functioning markets for SBS and related securities. MFA also generally supports the SEC’s approach of harmonizing Regulation SE with the approach taken by the Commodity Futures Trading Commission (the “CFTC”) with respect to its swap execution facility (“SEF”) rules, as we believe that a consistent regulatory regime across markets will be less costly to and more efficient for platform operators and other market participants.

However, MFA believes there are a few instances where additional clarity and modifications are necessary.  Our comments focus on a few aspects of Regulation SE that we believe can be better tailored to ensure that Regulation SE does not unnecessarily constrain or disrupt SBS markets given the crucial role that SBS play in, among other things, allowing firms to manage risk, enhancing the liquidity of related securities markets and facilitating capital formation.