Compliance With Certain Swap Regulations & US Person Definition

The Asset Management Group (AMG) of SIFMA provides comments to the Commodity Futures Trading Commission (CFTC) expressing its ongoing concerns regarding the application of the CFTC’s swap regulatory regime to cross-border swap activities, RIN-3038-AD85.

SIFMA AMG strongly urges the CFTC to extend the existing exemptive order for at least six months to provide the necessary time for coordination among domestic and international regulators and for market participants to adequately prepare.

If the CFTC is unwilling to extend the final exemptive order, the CFTC should not adopt an overly broad definition of U.S. person for funds and collective vehicles that do not have a direct and significant impact on U.S. commerce. SIFMA AMG has proposed a more streamlined and easier to apply definition that: (1) does not look to the status of indirect owners of a fund; (2) includes an uncollateralized exposure threshold; (3) carves out non-U.S. funds that are publicly offered to non-U.S. persons; (4) does not look to the location of a fund’s adviser, operator, promoter or sponsor; (5) avoids duplication by allowing for the recognition of comparable regulatory regimes; and (6) contemplates a phase-in period and compliance periods for any changes in status.  If an overly broad definition of U.S. person is adopted by the CFTC, it will put U.S.-based asset managers at a competitive disadvantage with asset managers outside the U.S and would also disadvantage U.S. investors who may be shut out from investing in some non-U.S. domiciled funds.