The Managed Funds Association has reaffirmed its support for proposals that would enhance the transparency and regulatory oversight over private pools of capital, including hedge funds and managed futures funds.
The testimony before the House Financial Services Committee hearing, "Capital Markets Regulatory Reform: Strengthening Investor Protection, Enhancing Oversight of Private Pools of Capital, and Creating a National Insurance Office”, comes as Congress begins to consider comprehensive reforms to the US financial regulatory system.
MFA outlined its positions on key issues impacting the alternative investment industry, including mandatory registration of unregistered investment advisers with the Securities and Exchange Commission or the Commodity Futures Trading Commission, the importance of enhanced investor and asset protection and the need for international coordination.
Stuart J. Kaswell, MFA general counsel, said: "The alternative investment industry has aligned interests with other market participants, including retail investors and policy makers, in re-establishing a sound financial system. We share their commitment towards the restoration of credit, capital and investor confidence in global markets that can, in part, be accomplished through the construction of a smarter framework for financial regulation.
"MFA and its members support mandatory registration for investment advisers to all private pools of capital under the Advisers Act, with a narrow exemption for those with a de minimis amount of assets under management, who would remain subject to regulation at the state level. MFA also supports a similar mandatory registration framework under the Commodity Exchange Act for all commodity trading advisers. As policy makers develop mandatory registration frameworks for both investment advisers and CTAs, we urge them to avoid imposing unnecessary, duplicative registration requirements for those entities that are registered with, and primarily supervised either by the CFTC or SEC.
“MFA supports other smart regulatory reform measures, including enhanced transparency and disclosure among counterparties, though we are concerned with initiatives that would require fund managers to disclose proprietary information to their counterparties, information which we believe should more appropriately be disclosed to a systemic risk regulator. We also support governance enhancements, through the Advisers Act framework, including increasing the qualified client standard, requiring disclosure of key service providers to investors and requiring an annual audit of private funds by a public company accounting oversight board registered firm.”
