MFA sends letter to SEC with request for relief for restricted period in Rule 105 of Reg M

MFA submitted a letter to the Securities and Exchange Commission to request exemptive relief with respect to the scope of the "restricted period" under Rule 105 of Regulation M. This letter supplements MFA's September 2025 submissions. MFA requests exemptive relief from the Commission to provide that the "restricted period" in Rule 105 starts when an announcement of a covered offering occurs and ends with pricing of the offering, with the goal of modernizing Rule 105 by addressing the high and unnecessary costs on issuers, investors, and U.S. capital markets of applying Rule 105, as currently written, to overnight and one-day offerings.

MFA outlines why the requested relief is necessary and appropriate below:

• The Rule fails to account for how equity securities are offered to investors, particularly the dramatic growth of overnight or one-day marketed offerings subject to Rule 105 ("Covered Offerings"). Of the 1,363 follow-on or secondary offering deals analyzed from 2022 to 2025, 94.25% were overnight or one-day marketed deals.
• Since Rule 105 was last updated 18-plus years ago, the Rule has unnecessarily restricted the ability of many institutional investment managers ("Investment Managers") to commit capital to participate in Covered Offerings, resulting in billions of dollars of uninvested capital and hundreds of deals not pursued annually from 2021 through 2025.
• Rule 105 does not work for these Covered Offerings because the Rule's five business-day restricted period captures investors who, just by chance, happened to engage in short selling before the public announcement of the Covered Offering and therefore, by definition, without any intent to depress the price of the offering.
• The Rule's bona fide purchase exception is often unavailable in these situations - only 6.75% of deals analyzed were eligible - leaving potentially interested investors with no option but to decline participation in the Covered Offering.