The MFA’s deregulation wishlist for the SEC
There has been a flourish of activity with the new Administration since President Trump was inaugurated on January 20, 2025, and one of his numerous Executive Orders focused on deregulation. Specifically, the Unleashing Prosperity Through Deregulation Order, Section 3 requires that whenever an agency promulgates a new rule, regulation, or guidance, it must identify at least 10 existing rules, regulations or guidance documents to be repealed. Practically, this Order may be difficult to govern. However, the spirit of the regulation is gaining momentum in the markets with one group focusing its efforts on the Securities Exchange Commission (SEC).
In a letter to acting SEC Chair Mark Uyeda, the Managed Fund Association (MFA), a private fund industry group, has urged the SEC to reform or withdraw numerous regulations introduced over the last four years, some of which are still in various forms of dispute in the courts. The MFA said its recommendations would “reduce costs and burdens on market participants and improve the efficiency of the financial markets.”
MFA recommendations include:
- The MFA asked the SEC to withdraw its appeal of a Court decision on the “Dealer rule”. The Court’s ruling vacated the SEC’s efforts to further define the term “dealer” and affirmed that alternative asset managers are not dealers. The SEC appealed the Court’s ruling on January 17, 2025. If the Court’s decision is reversed on the SEC’s appeal, the MFA believes the “Dealer” rule would be “unworkable and harmful to investors and the markets.”
- The MFA asked the SEC to extend the adoption date of the “new Form PF”, which is scheduled to go live in March 2025. The MFA asked the SEC to extend the compliance with new Form PF until September 2025
- The MFA asked the SEC to review an update of the “Form PF rule” from 2023, which requires funds to disclose more information, such as events that may indicate significant stress or otherwise signal the potential for systemic risk and investor harm, including significant margin calls or counterparty defaults, within 72 hours of the event.
- The MFA asked the SEC to consider reducing the amount of information reported on short selling and securities lending while awaiting a court decision on whether those rules should be vacated entirely.
- The MFA has asked the SEC to take steps to create a framework to govern digital asset securities and to ensure that private funds can invest in them without breaching custody requirements.
- The MFA called for an immediate halt to the SEC Division of Enforcement’s practice of “regulation through enforcement,” arguing that enforcement actions brought under the prior SEC regime had been overreaching and inconsistent with prior interpretation of securities laws and regulations.
As of the date of this article, we are not aware of any formal response from the SEC to the MFA’s letter.
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