“FICC’s proposal jeopardizes the Treasury markets—the foundation of the global financial system.” – Bryan Corbett, MFA President and CEO
Washington, D.C. – MFA urged the U.S. Securities and Exchange Commission (SEC) to mandate major revisions to the Fixed Income Clearing Corporation’s (FICC) proposed Treasury clearing rules in a supplemental comment letter submitted today.
The letter stresses that fixes to the proposal are necessary to ensure a smooth transition to mandatory central clearing, avoid disrupting the Treasury markets, and safeguard the U.S. government’s ability to issue and refinance its debt efficiently. The FICC rulemaking was mandated by the SEC Treasury Clearing rule that was finalized in 2023. This is MFA’s third letter on the FICC Treasury clearing rules.
“FICC’s proposal jeopardizes the Treasury markets—the foundation of the global financial system. The proposal will harm capital markets, hinder U.S. economic competitiveness, and increase the cost of government borrowing,” said Bryan Corbett, MFA President and CEO. “To foster a stable and efficient transition to central clearing, the SEC must take a more active role in the FICC rulemaking to ensure critical changes are implemented.”
MFA’s letter highlights how the proposal jeopardizes the stability of Treasury markets by not guaranteeing secure and effective access to clearing at FICC. It urges the SEC to ensure that FICC implements critical changes in advance of implementation to preserve the liquidity and investor confidence in the Treasury markets.
To meet the needs of indirect participants, including alternative asset managers, and create a resilient Treasury clearing ecosystem, MFA recommends that FICC and the SEC:
- Address the forced bundling of clearing and execution services to prevent anti-competitive practices
- Facilitate broader cross-margining opportunities to reduce clearing costs and enhance market efficiency
- Recalibrate the minimum segregated margin requirement for indirect participants instead of delaying this amendment
- Expedite addressing porting of customer positions and other default management practices
- Broaden the inter-affiliate exception to enable more effective liquidity and collateral management
Read the full comment letter here.
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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 $5.5 trillion (Q3 2023). 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 MFA
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 180 member fund managers, including traditional hedge funds, credit funds, and crossover funds, that collectively manage over $3.2 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.
