AMG Lends Support in Several Recent Comment Letters
This week, the Securities Industry and Financial Markets Association ("SIFMA") has submitted several comment letters on recent industry developments and proposals. The Asset Management Group reviewed the letters and provided feedback from the buy side perspective, where appropriate. Please see the following comment letters:
Comment Letter to Federal Reserve Bank of New York on Treasury Market Best Practices
In a comment letter filed with the Treasury Market Practices Group on March 14, 2007, SIFMA supports the Group's efforts to encourage all market participants to incorporate best practices in their daily operations in the market for Treasury securities. SIFMA believes that the overall tone of the Best Practices reflects appropriately the balance between overly burdensome specificity and overly broad generality, and allows market participants to develop their own internal guidelines that reflect the nature of their businesses and their activities in this market. Noting that the Best Practices represent existing notions of good market conduct and that the vast majority of market participants adhere to these practices already, SIFMA also expresses its intention to work with its broad membership to continue to develop industry wide practices addressing concerns that led to the development of the Best Practices and will, over time, contribute to and ensure the continued deep liquidity of the Treasury market.
Click here to read SIFMA letter on Treasury Market Best Practices
Click here to read Treasury Market Best Practices
Comment Letter to SEC on Credit Rating Agency Reform
In September 2006, the House of Representatives passed the Credit Rating Agency Reform Act of 2006, which was later signed by President Bush. The Act defines the term, "nationally recognized statistical rating organization" and provides authority for the SEC to implement registration, recordkeeping, financial reporting and oversight with respect to registered credit rating agencies. On February 2, 2007, the SEC issued a rule proposal to implement the provisions of the Credit Rating Agency Reform Act. On March 12, 2007, SIFMA submitted a comment letter to the SEC regarding the Commission's proposed rules. In its letter, SIFMA supports the Commission proposal, but asks for clarification and alteration on the section that relates to structured products and "notching" practices.
Click here to read SIFMA Comment Letter on Credit Rating Agency Reform
Click here to read SEC Rule Proposal
Comment Letter to SEC on Hedge Fund Proposal
In December 2006, the SEC proposed new rules to provide additional investor protections that would affect pooled investment vehicles, including hedge funds. First, the SEC proposed an anti-fraud rule that would prohibit advisers to pooled investment vehicles from making false or misleading statements. Second, the SEC proposed rules that would revise the definition of accredited investor as it relates to natural persons. On March 9, 2007, SIFMA submitted a comment letter to the SEC which supports its proposal generally, but suggests changes to the accredited investor portion of the proposal to avoid unintended consequences.
Click here to read SIFMA Comment Letter on SEC Hedge Fund Proposal
Comment Letter to IOSCO on Soft Commission Arrangements
In November 2006, the International Organization of Securities Commissions ("IOSCO") issued a consultation document that identifies regulatory concerns relating to soft commissions involving Collective Investment Funds. On Thursday, March 15, 2007, the International Council of Securities Associations ("ICSA"), of which SIFMA is a member, issued a comment letter in response to IOSCO's Consultation Report. In its letter, ICSA strongly supports the decision to monitor developments over the next two years before considering whether to develop general principles or other recommendations for soft commissions. ICSA suggests that some further clarification and elaboration be provided in order to create a better context for evaluating the benefits which soft commission arrangements would provide to investors. Furthermore, ICSA states that best execution should not necessarily be equated with lowest commission cost and that IOSCO should consider that implicit execution costs, such as market impact and opportunity costs (none of which are discussed in the Report), might greatly exceed explicit commission costs.
Click here to read ICSA Comment Letter on Soft Commission Arrangements
Click here to read IOSCO's Consultation Report on Soft Commission Arrangements