Change will make it easier for American investors to hedge risk
Washington, D.C. — MFA urged the Securities and Exchange Commission (SEC) to finalize its proposal moving futures on European Union (EU) bonds under the sole oversight of the Commodity Futures Trading Commission (CFTC) in a comment letter submitted today. Futures on EU debt currently face dual oversight by the SEC and CFTC, which limits who can trade them.
Futures on government bonds from large, liquid markets typically fall under CFTC regulation alone, because those markets are difficult to manipulate. That already applies to the bonds of 11 EU member states. EU debt is now comparable to those markets in size, liquidity, and credit quality, and the SEC’s proposal would give it the same treatment.
“This common-sense change advances the SEC and CFTC’s work to reduce regulatory overlap,” said Jennifer Han, MFA Chief Legal Officer. “EU debt has the liquidity and creditworthiness of Europe’s major government bonds, and the rules should treat it the same. This change will give American investors better tools to manage risk and greater access to an important global market.”
The change would open EU bond futures to a broader range of market participants. Today, access is largely limited to qualified institutional buyers and certain intermediaries. Broader access would let investors hedge EU debt exposures directly, rather than relying on imperfect substitutes. It would also add depth and competition to European markets. The underlying EU bonds would remain subject to the federal securities laws.
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.
