> Posted by Center Staff
Sixteen industry leaders and philanthropic funders have sent a letter to the US Commodity Futures Trading Commission (CFTC) requesting that MFX Solutions be offered “relief” from aspects of new legislation aimed at regulating the finance industry.
Among the signatories to the June 24 letter to CFTC Chairman Gary Gensler are ACCION International President Michael Schlein, Calvert Foundation CEO Lisa Hall, and Omidyar Network Managing Partner Matt Bannick.
The letter expresses concern that the proposed rules for the Dodd-Frank legislation could harm MFX Solutions, “a microfinance industry cooperative facility that allows microfinance funds to hedge the currency risk on their loans and thereby provide the local currency loans the industry needs.”
“It is our understanding that, under the proposed rules for the Dodd-Frank legislation, MFX would be designated as a “swap dealer”. This designation would impose collateral, margin and minimum capital requirements that would make it impossible for MFX to continue to serve the microfinance industry with affordable hedging products,” the letter says.
The letter further says that the signatories “respectfully request that the CFTC provide relief for organizations such as MFX, whose mission is unequivocally to reduce risk for a sector that otherwise does not have access to these important risk-management tools. “
The G-20 named MFX Solutions as a 2010 winner in its SME Finance Challenge to select the best new initiatives for catalyzing financing to small business in developing countries.
Click here to read more background information and the full text of the “MFX Letter to CFTC on Behalf of Microfinance Industry.”