Proposal will create concentration risks, harm competition, and increase costs in Treasury clearing
Washington, D.C. – MFA recommended that the Fixed Income Clearing Corporation (FICC) withdraw its proposed modifications to its Government Securities Division (GSD) rules pertaining to FICC membership and Treasury clearing in a comment letter today.
The MFA letter explains how the FICC proposal will harm competition by requiring FICC netting members to exclusively clear all eligible secondary market transactions with FICC. This will impede the ability of new clearing agencies to register with the SEC to compete with FICC, creating an anti-competitive monopoly that will increase concentration risk in the Treasury markets.
The letter also highlights how the proposal’s new ongoing membership requirements are unnecessary, costly, and inappropriate barriers to FICC membership. The FICC proposal mandates that FICC members perform an independent review to confirm they are clearing all eligible trades with FICC. No other clearing agency has an analogous requirement.
“The ill-conceived FICC proposal jeopardizes the health of the Treasury markets—the foundation of the global financial system. The proposal should be withdrawn since it creates concentration risks, harms competition, and increases costs in Treasury markets,” said Bryan Corbett, MFA President and CEO.
Read the full comment letter here.
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About the global alternative asset management industry
The global alternative asset management industry, including hedge funds, credit funds, and crossover funds, has assets under management of $5.5 trillion (Q3 2023). The industry serves thousands of public and private pension funds, charitable endowments, foundations, sovereign governments, and other global institutional investors by providing portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets.
About MFA
Managed Funds Association (MFA), based in Washington, DC, New York, Brussels, and London, represents the global alternative asset management industry. MFA’s mission is to advance the ability of alternative asset managers to raise capital, invest, and generate returns for their beneficiaries. MFA advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. MFA has more than 180 member fund managers, including traditional hedge funds, credit funds, and crossover funds, that collectively manage over $3.2 trillion across a diverse group of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors to diversify their investments, manage risk, and generate attractive returns over time.
