EL7.AI
BondsMedium•3 November 2026•
4 min read

MFA Backs SEC Proposal to Add EU Debt to List of Exempt Securities

Key Facts

1MFA backed a proposal to amend Rule 3a12-8 and submitted its comment on November 2, 2026.
2EU bonds recorded about 1.15 trillion euros in trading in the first half of 2025, according to MFA.
3Trading in the European sovereign contracts cited by Eurex reached about 1.02 billion contracts since the start of 2026, with 12.6% from U.S. participants or venues.
4MFA said the current framework generally limits participation to qualified institutional buyers and certain broker-dealers under a 2009 exemption.

The Managed Funds Association (MFA) backed a proposal by the U.S. Securities and Exchange Commission (SEC) to add European Union debt to the list of “exempt securities” in a comment submitted on November 2, 2026, by Jennifer W. Han, the association’s chief legal officer and head of regulatory affairs. The amendment would change Rule 3a12-8 under the Securities Exchange Act of 1934 to cover EU debt solely for purposes of marketing and trading futures on it. The association said including the debt “would remove an unnecessary distinction” between it and economically similar foreign government debt contracts. Its position supports a regulatory proposal; it does not constitute final adoption. The change focuses on broader access to EU debt-linked futures in the U.S. market.

Under the proposal, eligible futures on EU debt would fall under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC), if the amendment is adopted. The underlying bond offerings themselves would remain subject to federal securities laws, according to the SEC’s explanation. The proposed exemption is therefore limited to marketing and trading futures and does not extend to the bonds themselves. MFA said the amendment would expand risk-management tools and reduce operational friction. The proposal comes amid disparate treatment of EU debt contracts and contracts on foreign government debt already listed under the rule.

MFA said the current framework generally limits participation to qualified institutional buyers and certain broker-dealers under an exemptive order issued by the SEC in 2009. The association believes expanding access under Rule 3a12-8 would allow participants to hedge their exposure to EU debt more directly. It also said the change would reduce reliance on related instruments that could introduce basis risk, meaning a difference between the performance of a hedging instrument and the asset being hedged. This matters to institutions seeking to manage their exposure to EU debt through contracts directly linked to it. The SEC, for its part, said the proposal could improve hedging opportunities, lower transaction costs, and increase market depth and competition, as well as reduce operational friction.

MFA cited the size of the European debt market to illustrate the scale of activity covered by the proposal. It said EU bonds recorded about 1.15 trillion euros in trading in the first half of 2025 across secondary markets in the European Union and the United Kingdom. The association also cited a survey of EU bond investors in which 80% of respondents viewed the bonds as alternatives to core euro-area government bonds. These figures link the breadth of cash-bond trading with the importance of related hedging instruments, as MFA presented them in its letter. They are background data the association included to support its position on the proposal.

Eurex backed the proposal, saying it addresses regulatory uncertainty that had effectively prevented many U.S. participants from trading EU debt contracts. It said direct trading by U.S. participants would remain subject to CFTC product approval procedures. The exchange said trading volume in the European sovereign debt contracts covered by the list had reached about 1.02 billion contracts globally since the start of 2026, with about 12.6% of that volume coming from U.S. participants or venues. Eurex said these figures relate to the contracts described in its letter, and that the proposal removes disparate treatment between them and contracts on debt issued by 11 EU member states currently listed under the rule. It also called for the proposal to be adopted quickly and take effect upon publication, citing strong demand from U.S. persons for access to futures on EU debt.

The debate follows Eurex’s launch of Euro-EU Bond Futures on September 10, 2025. The exchange said when announcing the contracts that they were physically deliverable and designed to complement cash trading and repurchase agreements in EU bonds. The SEC set November 2, 2026, as the deadline for public comments on the proposal, the same date shown in the MFA comment record. The amendment’s effect will depend on the outcome of the regulatory process and on the product approvals cited by Eurex. The available materials did not mention a final decision on adopting the proposal.