The Managed Funds Association (MFA) held its annual Forum Conference in Chicago this June with Congress still wrangling over reconciliation of financial reform. MFA President and CEO Richard Baker has concerns regarding tax implications of certain proposals, but his chief concern is the process extending out indefinitely, creating more uncertainty for
his members. "
"From a political context we would prefer to see this regulatory matter concluded,” Baker says. “The uncertainty of the regulatory risk is presenting managers with a problem. Our folks are used to considering metrics and coming up with a response plan to identify risk. Political risk doesn’t fit any set of metrics one can devise. It is the unknowable: What are we going to be required to do? What will it cost and what are the deadlines?”
Baker did say that some of their initial concerns regarding possible dual regulation seem to have been addressed. “It appears that if you are a CTA registrant, you will not have to be registered with the SEC unless you are significantly engaged in securities activity and if you are registered with the SEC you won’t necessarily have to register with the CFTC unless you are significantly involved in futures. Exactly where those lines are drawn will likely be the subject of rule making between the two agencies over time because there are a lot of [activities] that need to be defined,” he adds.
Baker cautioned, however, that nothing has been finalized. “There is much more we don’t know specifically until the regulatory standards are adopted, which will be a long process.”
Words from the masters...
One panel at the MFA conference featured managed futures veterans George Crapple, William Eckhardt, Richard Slaughter and Carl Beck. Here are some pearls of wisdom they offered:
“Use a normal distribution [model] if you want to lose money.” -- Eckhardt
“The only thing the market gives you for free is diversification.” -- Slaughter