Hedge Funds
Hedge funds back SEC plan to put EU bond futures under CFTC oversight as comment window closes
The Managed Funds Association urged the SEC to finalise a rule change that would widen US access to futures on European Commission debt.
HedgeWeekly Hedge Fund Desk ·
The comment period on an SEC proposal to treat debt issued by the European Union as exempted securities for futures trading closed on Monday, with the Managed Funds Association among those backing it, according to a report from The Private Banker. The MFA urged the regulator to finalise the change.
The SEC proposed the amendment to Exchange Act Rule 3a12-8 on August 28. Futures on EU debt would fall under the exclusive jurisdiction of the CFTC, as futures on several EU member states' debt already do, while the SEC would keep jurisdiction over the underlying bonds. The proposal was published in the Federal Register on September 2, opening a 60-day comment window.
US persons can currently reach such contracts mainly through a 2009 SEC exemptive order that is largely limited to qualified institutional buyers and intermediaries acting for them. Eurex lists a Euro-EU Bond Futures contract that relies on that route. The SEC said it could not quantify several expected benefits and asked commenters for data on likely trading migration and costs.
For macro and relative-value funds, a single regulatory framework for EU-bond and member-state futures would simplify how positions in European rates are held and reported. A final rule has no announced date, and the SEC has also asked whether Rule 3a12-8 should be repealed altogether.