Key Takeaways
- • The Managed Funds Association (MFA) submitted a formal comment letter to the SEC and CFTC urging robust regulatory oversight of event contracts, perpetual contracts, and other novel derivative products to strengthen investor protections and market integrity.
- • MFA President and CEO Bryan Corbett emphasized that institutional investor confidence depends on clear regulatory frameworks, stating "The most successful financial innovations are the ones investors trust" and warning that proper oversight is essential for U.S. capital markets to remain competitive globally.
- • Event contracts tied to corporate outcomes present insider trading risks, as they could allow individuals with material non-public information to profit directly from that information, requiring strong SEC surveillance and detection mechanisms.
- • Perpetual contracts create distinct market risks by affecting pricing and liquidity in referenced asset markets, necessitating coordinated regulatory oversight to prevent manipulation and maintain market stability.
- • MFA recommends keeping securities-related products under appropriate SEC oversight within the Commission's surveillance framework to detect insider trading, prevent manipulation, and protect investors while supporting responsible market growth.
Summary
The Managed Funds Association has called on federal regulators to establish comprehensive safeguards for emerging derivative products, specifically event contracts and perpetual contracts, arguing that strong investor protections will paradoxically accelerate market expansion rather than constrain it. In a comment letter submitted to the SEC and CFTC on September 14, 2026, MFA outlined the regulatory gaps surrounding novel financial instruments and positioned robust oversight as essential infrastructure for institutional participation and market maturity.
MFA President and CEO Bryan Corbett framed the regulatory imperative around institutional investor confidence, noting that innovation succeeds only when market participants trust the oversight framework. "Confidence in how new markets are overseen is essential to broader participation by institutional investors," Corbett stated. "Getting this framework right will ensure U.S. capital markets remain the envy of the world and the destination of choice for investors and innovators." The statement reflects a strategic positioning by alternative asset managers that regulatory clarity—rather than light-touch oversight—attracts sophisticated capital and supports sustainable market growth.
The MFA identified two distinct risk profiles requiring regulatory attention. Event contracts tied to corporate outcomes create insider trading vulnerability by allowing parties with material non-public information to profit directly from that information, requiring robust surveillance capabilities and clear detection protocols. Perpetual contracts present a separate class of systemic risk: they affect pricing and liquidity in the underlying asset markets they reference, creating potential contagion points between derivatives markets and spot markets. Both product categories warrant coordinated SEC and CFTC authority to maintain market integrity across jurisdictional boundaries.
MFA's core recommendation centers on consolidating securities-related products under SEC oversight, embedding these novel instruments within the Commission's existing surveillance framework for insider trading detection and manipulation prevention. This jurisdictional clarity would establish a unified regulatory perimeter around derivatives linked to securities markets, supporting both investor protection and the responsible commercialization of financial innovation.
MFA President and CEO Bryan Corbett framed the regulatory imperative around institutional investor confidence, noting that innovation succeeds only when market participants trust the oversight framework. "Confidence in how new markets are overseen is essential to broader participation by institutional investors," Corbett stated. "Getting this framework right will ensure U.S. capital markets remain the envy of the world and the destination of choice for investors and innovators." The statement reflects a strategic positioning by alternative asset managers that regulatory clarity—rather than light-touch oversight—attracts sophisticated capital and supports sustainable market growth.
The MFA identified two distinct risk profiles requiring regulatory attention. Event contracts tied to corporate outcomes create insider trading vulnerability by allowing parties with material non-public information to profit directly from that information, requiring robust surveillance capabilities and clear detection protocols. Perpetual contracts present a separate class of systemic risk: they affect pricing and liquidity in the underlying asset markets they reference, creating potential contagion points between derivatives markets and spot markets. Both product categories warrant coordinated SEC and CFTC authority to maintain market integrity across jurisdictional boundaries.
MFA's core recommendation centers on consolidating securities-related products under SEC oversight, embedding these novel instruments within the Commission's existing surveillance framework for insider trading detection and manipulation prevention. This jurisdictional clarity would establish a unified regulatory perimeter around derivatives linked to securities markets, supporting both investor protection and the responsible commercialization of financial innovation.
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