International Swaps Regulation - Comment Letter - Alternative Investment Management Association - September 26, 2011

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Acceptance of Public Submissions for a Study on International Swap Regulation
September 26, 2011

Summary of key points from the comment letter:

  • AIMA supports the full and prompt implementation of Title VII of the Dodd-Frank Act.
  • There is insufficient certainty around the territorial scope of Title VII and formal rulemaking or guidance is requested from the Commissions in this regard.
  • Asset management firms act as intermediaries for their investors and, therefore, the location of their trading office, operations office or the fund vehicle is not relevant for determining the territorial scope of Title VII and its application to those firms.
  • Relevant considerations for determining what will impact the ‘commerce of the United States’ include the location of the underlying investors, the counterparty to a trade and the underlying of a swap.
  • ‘Evasion’ of the Dodd-Frank Act should be the subject of a clear definition, which should carve out legitimate business conducted outside of the United States for, inter alia, reasons of efficiency and compliance with fiduciary obligations.
  • The Commissions should make further efforts to ensure consistency of the Title VII rulemaking with similar provisions in Europe and Asia. Doing so will create significant benefits for all parties, including the reduction of costs, reduction of systemic risk and the ability of market regulators to effectively oversee the global markets.
  • The Commissions should provide for recognition of OTC derivative regulatory regimes which have equivalent effect to that of Title VII.
  • Key areas where greater consistency is desirable include: the features of swaps trading venues; segregation models for client collateral; and CCP ownership and governance.
  • The Commissions should proceed promptly to implement the Title VII rules. However, due consideration must be given to the timing of equivalent regulation outside the US that will impact US counterparties and the US markets.

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