Hedge fund industry body the Managed Funds Association has called on the US authorities to put more resources into regulatory action against market manipulation, and especially to bolster
Hedge fund industry body the Managed Funds Association has called on the US authorities to put more resources into regulatory action against market manipulation, and especially to bolster the investigative capability of the US futures market regulator, the Commodity Futures Trading Commission.
In a study, Analysis and Recommendations: The Investor in a Sound Futures Market, the MFA sets out a series of recommendations designed to promote economic growth and stability.
The publication emphasises the ‘invaluable role’ that investors play in the futures markets by absorbing risk from commercial market participants, supplying much-needed capital, reducing volatility and contributing to the price discovery process.
‘With this analysis, we are asking Congress to take immediate action to end the abusive practices of manipulators and give the CFTC the funds it needs to expand its oversight of the futures markets,’ says MFA president and chief executive Richard H. Baker.
‘It’s critical that policy makers recognise the role that investors play in providing market liquidity and not unintentionally punish responsible market participants. Maintaining confidence in the futures markets requires that Congress not overreact and potentially do more harm than good.’
In its analysis, the MFA calls on the US Congress to provide funds to increase CFTC oversight, improve its information technology and data gathering capacity and hire more enforcement and surveillance staff.
Its also wants the legislature to mandate the CFTC to obtain all necessary market intelligence through its special call authority in an effort to prevent market manipulation, and to report back to Congress before September 15.
In addition, the MFA says, President George Bush should direct the President’s Working Group on Financial Markets to undertake a comprehensive review of the factors affecting commodity prices and the adequacy of the country’s regulatory tools to combat manipulation and abusive market practices, including an assessment of current legislative proposals on US futures markets.
The MFA says it has a long history of taking proactive steps to maintain and enhance principles and values in the alternative investment industry. Last November the association issued an updated edition of Sound Practices for Hedge Fund Managers, a guide for managers seeking to foster a culture of compliance, in response to the call by the President’s Working Group for the industry to establish standards of excellence for improved market discipline and enhanced vigilance through collaborative efforts among counterparties.
The Managed Funds Association, whose members include hedge fund, fund of funds and managed futures fund management professionals, was established in 1991 as a source of information for policymakers and the media as well as an advocate for sound business practices and industry growth. The MFA is headquartered in Washington, DC, with an office in New York.
