HomeNews & BlogMFA Comment Letter Supports SEC’s Proposed Rules for Government ATSs and Opposes Expanded Exchange Definition

MFA Comment Letter Supports SEC’s Proposed Rules for Government ATSs and Opposes Expanded Exchange Definition

Letter on the SEC’s Regulation ATS and exchange definition proposal details how proposed rules will hurt asset managers’ development of new technology

WASHINGTON, DC– Managed Funds Association (MFA) reiterated support for regulating Government alternative trading systems (ATSs) as ATSs and disagreement with expanding the “exchange” definition in a new comment letter to the Securities and Exchange Commission (SEC). The SEC recently re-opened the comment period for a proposal on Regulation ATS (Reg ATS) and the definition of an exchange. The letter represents the second letter MFA sent to the SEC on this proposed rulemaking.
The proposed exchange rule would expand the definition to include communications protocol systems. MFA’s letter explains that since the communications protocol systems used by managers are substantially different from exchanges they should not be regulated as exchanges or ATSs. The letter also highlights how the expanded definition would hinder technology development in the financial services industry by increasing the regulatory burden and the costs for managers in developing and using these technologies, which would lead to higher trading costs for their investors, such as pensions, foundations, and endowments.

“The proprietary systems and technology alternative asset managers use should not be regulated like exchanges, since they do not execute trades and bear no resemblance to an exchange,” said Bryan Corbett, MFA President and CEO. “MFA is grateful the SEC re-opened the comment period and sought additional comment on the more controversial elements of the proposal. However, the revised proposal still has considerable flaws in its unprecedented application of Reg ATS to the systems managers use. This will harm the ability to generate returns for the pensions, foundations, and endowments they serve.”

MFA’s letter also answered several questions specific questions poised in the re-opened proposal.

Read MFA’s comment letter here.


About the Global Alternative Asset Management Industry

The global alternative asset management industry, including hedge funds, credit funds, and crossover funds, has assets under management of $4 trillion (Q4 2022). The industry serves thousands of public and private pension funds, charitable endowments, foundations, sovereign governments, and other global institutional investors by providing portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets.

About Managed Funds Association

Managed Funds Association (MFA), based in Washington, DC, New York, 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, 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 170 member firms, including traditional hedge funds, credit funds, and crossover funds, that collectively manage nearly $2.2 trillion across a diverse group of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors to diversify their investments, manage risk, and generate attractive returns over time.

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