Request for Exemptive Relief Under Section 36 of the Securities Exchange Act of 1934 — Extension of Inter-Affiliate Exception Relief to Private Fund Families
Summary
SIFMA and SIFMA AMG provided comments to the U.S. Securities and Exchange Commission (SEC) on behalf of private funds and their affiliated investment advisers regarding the use of captive clearing subsidiaries to access central clearing for U.S. Treasury repo and reverse repo agreements.
Excerpt
The Securities Industry and Financial Markets Association 1 (“SIFMA”), the Asset Management Group of the Securities Industry and Financial Markets Association 2 (“SIFMA AMG”) and their members (collectively, the “Associations,” “we,” “our” or “us”) respectfully submit this letter (this “Letter”) on behalf of private funds 3 and their affiliated investment advisers that maintain, or contemplate establishing, directly or indirectly, wholly-owned captive broker-dealer or futures commission merchant subsidiaries (each, a “Captive Clearing Subsidiary”) that act as direct members of Treasury CCAs (as defined below) for the purpose of accessing central clearing for U.S. Treasury security repurchase (“repo”) agreements and reverse repo agreements.
Pursuant to Section 36(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), we hereby request that the U.S. Securities and Exchange Commission (the “Commission”) grant targeted exemptive relief from the condition in the Treasury Clearing Rule (as defined below) requiring that an “affiliated counterparty” be a bank, broker-dealer, futures commission merchant or foreign equivalent (each, an “Exempted Entity”) (such condition, the “Enumerated Entity Condition”) as applied to inter-affiliate U.S. Treasury repo agreements between any Private Fund or Private Funds managed by a single investment adviser or a group of affiliated investment advisers (together, a “Fund Family”) and their directly or indirectly wholly-owned Captive Clearing Subsidiaries.
We would like to acknowledge and make note of the exemptive request (the “MFA Letter”) submitted on December 18, 2024 by the Managed Funds Association (“MFA”) 4 , as well as the exemptive request (the “SIFMA Letter”) submitted on April 10, 2026 by SIFMA 5 . The Associations agree with the positions and arguments in the MFA Letter and the SIFMA Letter and submit this request to provide Inter-Affiliate Exception (as defined below) relief to any Fund Family that utilizes a Captive Clearing Subsidiary structure (“Captive Clearing Structure”). We believe the requested relief is consistent with the public interest and the protection of investors, as required by Section 36(a) of the Exchange Act, for the reasons set forth below.
Executive Summary
The Associations support mandatory clearing as a robust long-term market structure for U.S. Treasury securities. However, the Enumerated Entity Condition in the Inter-Affiliate Exception to the Treasury Clearing Rule effectively forecloses the use of Captive Clearing Structures by Private Funds, notwithstanding that all other conditions of the exception are satisfied. This Letter requests that the Commission grant targeted exemptive relief under Section 36(a) of the Exchange Act from the Enumerated Entity Condition as applied to inter-affiliate U.S. Treasury repo and reverse repo agreements between any Fund Family and its wholly-owned Captive Clearing Subsidiaries. In this respect, this Letter is distinct from the Associations’ separate comment letter submitted to the Commission regarding exemptive relief for non-U.S. persons from the Trade Submission Requirement, which did not address relief for Private Funds utilizing Captive Clearing Structures.
The requested relief would expand access to central clearing, preserve all other Inter-Affiliate Exception safeguards, promote netting efficiency and cross-margining benefits, harmonize the Commission’s framework with the CFTC’s inter-affiliate approach and protect investors by enabling Private Fund complexes to access central clearing through efficient Captive Clearing Structures.
- SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed-income markets and related products and services. We serve as an industry-coordinating body to promote fair and orderly markets, informed regulatory compliance and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.
- SIFMA AMG brings the asset management community together to provide views on U.S. and global policy and to create industry best practices. SIFMA AMG’s members represent U.S. and global asset management firms that manage more than 50% of global AUM. The clients of SIFMA AMG member firms include, among others, tens of millions of individual investors, registered investment companies, endowments, public and private pension funds, UCITS and Private Funds such as hedge funds and private equity funds. For more information, visit http://www.sifma.org/amg.
- Issuers that would be investment companies but for Sections 3(c)(1) or 3(c)(7) of the Investment
Company Act of 1940 (“Private Funds”). - See Letter from Jennifer M. Han, Executive Vice President, Chief Counsel and Head of Global Regulatory Affairs, MFA, dated December 18, 2024, available at https://www.mfaalts.org/wp-
content/uploads/2024/12/MFA-Treasury-Clearing-Mandate-Exemption-Request-inter-affiliate-exception-As-submitted-12.18.24.pdf. - See Letter from Robert Toomey, Head of Capital Markets, Managing Director/Associate General Counsel, SIFMA, dated April 10, 2026, available at https://www.sifma.org/wp-content/uploads/2026/04/SIFMA-Section-36-Exemptive-Relief-Request-for-Interaffiliate-Transactions.pdf.