MFA commends CDS working group report

Date: Wednesday, July 15, 2009

The Managed Funds Association has commended a working group paper analyzing US and European credit default swap clearing solutions.

The paper, 'Report to the Supervisors of the Major OTC Derivatives Dealers on the Proposals of Centralized CDS Clearing Solutions for the Segregation and Portability of Customer CDS Positions and Related Margin', was submitted to industry regulators on 30 June 2009.

The report, written by a special working group of eight dealers, four MFA members and four other buy-side market participants, addresses key concerns raised by supervisors and legislators globally, to analyze the various US and European CDS clearing solutions with respect to the issues of customer margin segregation and portability of cleared customer CDS positions.

Richard H. Baker (pictured), MFA president and chief executive, says: 'The efforts of the special working group and the Report are both comprehensive and timely. MFA has been a strong proponent in advocating collateral segregation, portability of trades and direct and indirect buy-side access to centralized clearing. We remain committed to working with industry regulators, industry working groups such as the Operations Management Group, and other trade associations on the next steps toward providing such access.'

MFA is committed to developing and advancing critical commitments for reducing counterparty and systemic risks and improving operational efficiency in OTC derivatives processing.

Through its participation in the Operations Management Group, it joined the major derivatives dealers and buy-side institutions in presenting a letter on 2 June 2009 to global industry regulators that established new commitments to address key concerns raised by supervisors and legislators globally, notably the G20, European Commission and the US Department of Treasury. The report is one of the agreed deliverables following from the letter.