Managed Funds Association (MFA) has written a comment letter to His Majesty’s Treasury endorsing the UK government’s proposed changes to its Short Selling Regulation (SSR) relating to sovereign debt and credit default swaps (CDS).
In the letter, MFA emphasised that the SSR review is a critical step toward strengthening the UK’s “dynamic and attractive international financial services centre”. MFA highlights that the high compliance cost of three requirements under the current SSR is unnecessary, given the depth and liquidity of the UK gilt market.
MFA supports the UK government’s proposal to eliminate: the cover requirement for short selling sovereign debt; the ban on uncovered sovereign CDS positions; and low reporting thresholds for net short positions in sovereign debt and CDS.
Earlier this month, MFA and its members also offered views of the alternative asset management sector at HM Treasury’s industry roundtable on sovereign debt and CDS. MFA has been actively engaged throughout the SSR review process, including providing feedback to HM Treasury’s Call for Evidence on the existing SSR framework for equities. The UK government then published proposed targeted amendments to the SSR based on industry consultation, including improved modifications to equity short sale public disclosure and position reporting.
