SIFMA provides comments to the Financial Stability Oversight Council (FSOC) on the study regarding the implementation of the prohibitions on proprietary trading and certain relationships with hedge funds and private equity funds, Docket Number FSOC 2010-0002.

This comment letter relates solely to the portion of the Study related to hedge funds and private equity funds. SIFMA is writing a separate letter on the proprietary trading portion of the Study.

SIFMA believes that the issues arising out of the proprietary trading portion of the Volcker Rule are very different from those arising out of the funds portion. The proprietary trading provisions are based on vague definitions. In contrast, the provisions in the Volcker Rule relating to hedge funds and private equity funds do not generally suffer from excessive vagueness. Instead of lacking specificity, the key definitions in this portion of the Volcker Rule are generally overbroad.

While we do not address in this letter whether the activities prohibited by the Volcker Rule caused the financial crisis, we believe there are cogent arguments that they did not. We ask that the FSOC and regulators consider these arguments when implementing the Volcker Rule.