Recommendations will improve oversight without creating duplicative reporting requirements
WASHINGTON, D.C. – MFA urged the International Organization of Securities Commissions (IOSCO) to adopt a targeted, risk-based approach to over-the-counter (OTC) commodity derivatives markets in a comment letter submitted Friday. The letter responds to IOSCO’s consultation on good practices for OTC commodity derivatives markets and includes recommendations to strengthen regulators’ ability to monitor risks while preserving market liquidity and efficiency.
“Commodity derivatives markets help businesses manage risk and help energy, agriculture, livestock, and other essential goods move through the global economy,” said Jillien Flores, Chief Advocacy Officer at MFA. “Regulators should have the tools they need to oversee these markets, but oversight must be targeted and proportionate. A risk-based approach will strengthen market integrity while preserving the liquidity that businesses and investors rely on.”
MFA supports IOSCO’s goal of improving transparency and oversight in commodity derivatives markets. Creating broad new reporting obligations requires firms to submit data regulators already receive and diverts regulator resources away from the contracts and activities that pose the greatest risks to market integrity.
To improve oversight while avoiding unnecessary burdens on market participants, MFA recommends that IOSCO:
- Focus enhanced oversight on critical contracts that pose the greatest risks to market integrity.
- Leverage existing reporting frameworks before creating new reporting obligations.
- Place reporting obligations on dealers and other intermediaries best positioned to provide information efficiently.
- Favor targeted, risk-based information requests over broad, routine reporting requirements.
- Promote cross-border coordination and information sharing among regulators.
- Protect confidential and proprietary trading information through robust safeguards.
Read the full letter here.
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.
