Managed Funds Association Submits Comments To SEC On Soft Dollars

Managed Funds Association (MFA) submitted a comment letter to the Securities and Exchange Commission in response to its request for comments on proposed commission guidance regarding client commission practices under Section 28(e), "Safe Harbor" act," of the Securities Exchange Act

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Managed Funds Association (MFA) submitted a comment letter to the Securities and Exchange Commission in response to its request for comments on proposed commission guidance regarding client commission practices under Section 28(e), “Safe Harbor” act,” of the Securities Exchange Act of 1934.

The SEC’s proposed guidance advises money managers on their use soft dollars to pay for research and brokerage services.

MFA commended the SEC for providing a framework for analyzing whether a particular service falls within the definition of “brokerage and research services.” The MFA agreed with the regulatory agency’s interpretation of the “safe harbor” act, it claims that the proposed interpretation is too narrow and is contrary to the interests of investors with respect to its interpretation of post-trade analytics.

MFA stated in its letter that while the SEC’s assertion that “products and services such as trade analytics, surveillance systems, or compliance mechanisms, do not qualify as ‘brokerage’ in the safe harbor because they are not integral to the execution of orders by the broker-dealers.” MFA argues that products and services such as post-trade execution quality analysis are directly relevant to the ability of an investment manager to obtain the “best execution” of its orders.

The DC-based group is a trade association which represents professionals specializing in alternative investment strategies, including representatives from the majority of the world’s largest hedge funds.

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