Recommendations will promote capital formation, improve market efficiency, and strengthen economic growth
Washington, D.C. — MFA urged the Office of Management and Budget (OMB) and the Securities and Exchange Commission (SEC) to eliminate or revise federal rules that exceed agency authority, impose unnecessary burdens, or hinder capital formation in two separate letters submitted today. The recommendations align with the Trump Administration’s Executive Orders calling for a regulatory freeze, ensuring lawful governance, and reducing anti-competitive regulatory barriers. The OMB letter also responds to its request for input on unlawful or harmful regulations.
“MFA’s recommendations will cut unnecessary red tape, restore lawful governance, and ensure regulators stay within their mandate,” said Bryan Corbett, MFA President and CEO. “Years of regulatory excess have harmed U.S. capital markets—it’s time to return to rules grounded in clear statutory authority and sound cost-benefit analysis. Eliminating unlawful and burdensome rules will help the Administration strengthen public and private capital markets, attract investment, and support economic growth. We look forward to working with regulators on policies that enhance U.S. economic leadership and global competitiveness.”
MFA’s recommendations to eliminate or revise rules that are duplicative, burdensome, or unlawful will:
- Promote capital formation and enhance economic growth.
- Improve market efficiency and reduce regulatory duplication.
- Lower compliance costs for investors and managers.
- Strengthen cybersecurity safeguards and reduce unnecessary data collection.
- Support innovation and ensure lawful, transparent rulemaking.
The specific recommendations in the letters include:
- Reinstate FSOC’s 2019 designation guidance. The 2023 Financial Stability Oversight Council (FSOC) guidance allows asset managers to be designated as systemically important and subjected to bank-like regulation—despite posing no systemic risk. Reinstating the transparent, activities-based 2019 guidance would reduce uncertainty and prevent inappropriate systemic risk designations for well-regulated asset managers.
- Rescind the 2023 and 2024 Form PF amendments. These amendments require private fund managers to report data unrelated to systemic risk, exceeding statutory authority and imposing significant compliance costs. A more tailored approach would ensure regulators receive useful data while protecting sensitive fund information and conserving manager resources.
- Expand investor access to private markets and modernize retirement investment rules. Investors—especially retirement savers—have limited access to private markets. MFA recommends:
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- Streamlining approvals for closed-end funds.
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- Clarifying rules for business development companies (BDCs).
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- Enabling broader access to alternatives within regulated vehicles.
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- Providing Department of Labor guidance for plan sponsors to offer alternatives within ERISA’s fiduciary framework.
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- Increasing flexibility to align retirement plans with long-term investor goals.
- Rescind and revise short position and securities lending rules. These rules exceed the SEC’s authority, and are duplicative, inconsistent, and costly. The short position rule also overlaps with Financial Industry Regulatory Authority (FINRA) disclosures and risks exposing proprietary trading strategies. The SEC should rescind both and adopt a streamlined framework that protects market-sensitive data.
- Reform SEC enforcement of Rule 105 of Regulation M. The SEC’s strict liability approach to Rule 105 enforcement discourages investment managers from participating in public offerings, raising capital costs. MFA recommends refocusing enforcement on actual manipulation, not technical violations.
- Eliminate buy-side OFR repo reporting. The Office of Financial Research (OFR) already receives repo data from sell-side firms. Requiring buy-side firms to report the same transaction is unprecedented, burdensome, duplicative, and risks distorting data. The rule should be amended to eliminate the reporting obligation for buy-side firms.
- Strengthen cross-border regulatory coordination. U.S. managers face duplicative regulation at home and abroad. MFA recommends:
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- Aligning SEC and Commodity Futures Trading Commission (CFTC) oversight.
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- Establishing substituted compliance with foreign regulators.
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- Harmonizing definitions like “U.S. person” and resolving conflicting cross-border guidance.
- Revise and delay implementation of FinCEN AML rules. The 2024 anti-money laundering (AML) rules impose bank-like requirements on asset managers that do not accept cash or hold client assets. MFA urges the Financial Crimes Enforcement Network (FinCEN) to:
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- Delay implementation.
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- Repropose the rule alongside the pending Customer Identification Program (CIP) rule.
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- Issue detailed FAQs to support effective, risk-based compliance programs.
- Clarify the “dealer” definition. The SEC’s vacated 2024 rule applied an expansive definition of “dealer” that lacked statutory authority. A federal court confirmed a dealer must provide dealer services to customers, not simply trade actively. MFA urges the SEC to formally adopt an interpretation consistent with this ruling to provide market certainty and avoid future regulatory overreach.
- Rescind quarterly Schedule 13G reporting. Quarterly 13G filings duplicate Form 13F disclosures and add significant compliance burdens with little benefit. MFA recommends eliminating the quarterly requirement and integrating beneficial ownership disclosure into Form 13F to streamline reporting.
Read the full letter to OMB here.
Read the full letter to the SEC here.
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