HomeNews & BlogMFA to IOSCO: Applying a Broad Regulatory Regime Could Harm Leveraged Loan and CLO Market

MFA to IOSCO: Applying a Broad Regulatory Regime Could Harm Leveraged Loan and CLO Market

Washington, D.C. — In a comment letter filed today, MFA discouraged the International Organization of Securities Commissions (IOSCO) from adopting measures that would apply a generic, poorly tailored regulatory framework to the leveraged loans and collateralized leveraged loans (CLO) markets.

Alternative asset managers rely on stable and active leveraged loan markets to provide returns to their beneficiaries, including pension funds. The letter warns that adopting the proposed one-size-fits-all regulatory framework will increase the cost of capital and decrease the loans available to small and mid-size businesses. This will harm businesses’ ability to expand or operate, and negatively impact jobs and innovation, and the economy.

“The leveraged loan market’s success and growth over the past two decades has enabled businesses to grow and has fueled our economy,” said Bryan Corbett, MFA President and CEO. “Applying a one-size-fits-all regulatory framework to leveraged loans will harm liquidity and impair small and mid-sized businesses’ access to capital.”

MFA’s letter highlights that the leveraged loan market is well functioning and meets the needs of both borrowers and loan buyers. Investors are well protected within the existing regulatory framework. MFA cautions against additional regulatory complexity that fails to benefit investors or promote greater market efficiency

Read the full 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 $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 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 $3 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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