MFA sent a letter to the Securities and Exchange Commission (SEC) that requested the SEC grant targeted exemptive relief with respect to the inter-affiliate exception to the clearing mandate for U.S. Treasury security repurchase and reverse repurchase transactions between a Private Fund and its Captive Clearing Sub.
The request for relief is subject to the conditions that:
- The Captive Clearing Sub is directly or indirectly wholly-owned by one or more Private Funds
- The Private Funds are managed by a common investment adviser or affiliated group of investment advisers
- The Private Funds and the Captive Clearing Sub satisfy any other applicable conditions to the inter-affiliate exception, including the outward-facing trade clearing condition, to the extent it would otherwise apply
Because the relief would leave intact the outward-facing trade clearing condition, the common majority ownership condition, and the accounting consolidation condition of the inter-affiliate exception, MFA believes the requested relief would be consistent with the rationale for the inter-affiliate exception as articulated by the Commission when it adopted the Treasury Clearing Rule.
