Key Takeaways
- • The Managed Funds Association (MFA) has formally urged the SEC to conduct comprehensive analysis before rescinding key Regulation NMS rules that govern U.S. equity markets, citing concerns about unintended consequences for investors and market quality.
- • MFA Chief Legal Officer Jennifer Han stated the alternative asset management industry supports efficiency improvements but emphasizes that "major changes to market structure rules require a rigorous analysis of how they will affect investors, liquidity, and market quality."
- • The organization has identified three critical areas requiring deeper SEC assessment: execution quality and displayed liquidity impacts, pre-trade price transparency and National Best Bid or Offer (NBBO) effects, and implications for the broader regulatory framework including best execution requirements.
- • MFA recommends the SEC evaluate more targeted alternatives, such as volume thresholds for protected quotations, before removing foundational market protections that have underpinned U.S. equity market efficiency.
- • The proposal raises concerns about whether rule changes would strengthen U.S. markets or create regulatory gaps, given that numerous SEC and self-regulatory organization rules depend on protected quotations and the NBBO as objective benchmarks.
Summary
The Managed Funds Association has submitted a formal comment letter to the Securities and Exchange Commission opposing the regulator's proposal to rescind key Regulation NMS rules without additional analysis. Released August 17, 2026, MFA's position reflects concerns from the alternative asset management industry about the SEC's effort to simplify equity market structure through what the regulator frames as a modernization initiative.
While MFA acknowledges the SEC's intent to improve efficiency and reduce complexity, the organization contends that fundamental changes to market structure require rigorous evaluation before implementation. Jennifer Han, MFA Chief Legal Officer, emphasized that U.S. equity markets rank among the world's deepest and most efficient, providing both retail and institutional investors with liquidity, transparent pricing, and high-quality execution—benefits that must be carefully weighed against proposed reforms.
MFA has outlined three specific analytical gaps it believes the SEC must address before proceeding. First, the organization calls for rigorous assessment of how the proposal would affect execution quality, displayed liquidity, pre-trade price transparency, and the National Best Bid or Offer (NBBO)—metrics that are foundational to current market functioning. Second, MFA recommends the SEC meaningfully evaluate more targeted alternatives, such as implementing volume thresholds for protected quotations, rather than rescinding protections wholesale. Third, the organization emphasizes that the SEC must address how the proposal would cascade through the broader regulatory framework, particularly given that numerous SEC rules and self-regulatory organization requirements depend on protected quotations and the NBBO as objective benchmarks for best execution and other compliance obligations.
MFA's submission positions the alternative asset management industry as supportive of legitimate market structure improvements while cautious about unintended consequences. The organization represents more than 180 fund manager members, including traditional hedge funds, private credit funds, and hybrid funds that collectively serve pension funds, endowments, foundations, and other institutional investors globally.
While MFA acknowledges the SEC's intent to improve efficiency and reduce complexity, the organization contends that fundamental changes to market structure require rigorous evaluation before implementation. Jennifer Han, MFA Chief Legal Officer, emphasized that U.S. equity markets rank among the world's deepest and most efficient, providing both retail and institutional investors with liquidity, transparent pricing, and high-quality execution—benefits that must be carefully weighed against proposed reforms.
MFA has outlined three specific analytical gaps it believes the SEC must address before proceeding. First, the organization calls for rigorous assessment of how the proposal would affect execution quality, displayed liquidity, pre-trade price transparency, and the National Best Bid or Offer (NBBO)—metrics that are foundational to current market functioning. Second, MFA recommends the SEC meaningfully evaluate more targeted alternatives, such as implementing volume thresholds for protected quotations, rather than rescinding protections wholesale. Third, the organization emphasizes that the SEC must address how the proposal would cascade through the broader regulatory framework, particularly given that numerous SEC rules and self-regulatory organization requirements depend on protected quotations and the NBBO as objective benchmarks for best execution and other compliance obligations.
MFA's submission positions the alternative asset management industry as supportive of legitimate market structure improvements while cautious about unintended consequences. The organization represents more than 180 fund manager members, including traditional hedge funds, private credit funds, and hybrid funds that collectively serve pension funds, endowments, foundations, and other institutional investors globally.
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