Brussels, Belgium – MFA issued the following statement in response to the Financial Stability Board (FSB) report on the use of leverage by nonbank financial intermediaries:
“Leverage, in and of itself, does not present a financial stability risk. In fact, the use of leverage by alternative asset managers is a well-regulated activity that helps stabilize markets and drive economic growth by enabling greater risk-offsetting, enhancing liquidity, and promoting capital formation. Alternative asset managers and their prudentially regulated counterparties deploy extensive risk management procedures regarding the use of leverage. Inappropriately limiting leverage will harm the capital markets by increasing the cost of government borrowing, hindering businesses access to capital, and reducing the number of market participants.” – Jillien Flores, MFA Head of Global Government Affairs
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 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 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.
