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MFA joins derivatives dealers in commitment to boost market efficiency

The Managed Funds Association has announced that it is joining the 17 major derivatives dealers as a signatory to a letter to global regulators committing them to improving operational efficiency in OTC derivatives, as well as commodities and foreign exchange markets and collateral management.

The letter reaffirms the ongoing co-operation between the buy-side and sell-side, and represents a step-up in commitments to improve market discipline and efficiency through the use of electronic platforms.

The MFA first joined the so-called major dealers as a signatory to a letter to industry regulators detailing operational targets and commitments in March this year, which was also signed by the International Swaps and Derivatives Association and the asset management group of the Securities Industry and Financial Markets Association.

In June the MFA and other members of the operations management group, including representatives of the major dealers, ISDA, Sifma and several buy-side institutions met with US and international regulators to review commitments and progress in this area

'MFA is pleased to have a major role in advancing the latest industry strategy and commitments to reach these important industry goals,' says the association's president and chief executive Richard H. Baker.

'We reaffirm our commitment to working closely with the major dealers, ISDA and Sifma, and we are pleased to expand these important operational goals and provide detailed commitments that reach beyond previous objectives.

'MFA fully endorses the collaborative efforts to promote sound practices and efficiency and pledges to actively work with our constituents and other market participants to educate the marketplace on the goals outlined in this letter.'

MFA began working with the dealer community in early 2005 to develop ways to improve processing practices for new trades and novations in the credit derivatives market. The association says collaborative efforts with the major dealers, ISDA and its member firms and Sifma have led to initiatives producing substantial reductions in backlogs of trade confirmations for credit derivatives.

In furtherance of the commitments outlined in March, MFA, ISDA and Sifma have jointly developed an implementation plan to help educate and inform the buy-side of the credit derivative processing goals, and since its completion in late May the three organisations have held educational events for the buy-side in New York and London.

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.

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