SEC Lifts Moratorium on Actively Managed Exchange-Traded Funds' Use of Derivatives

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On December 6, 2012, the U.S. Securities and Exchange Commission (the "SEC") announced that it will no longer defer consideration of exemptive requests relating to actively managed exchange-traded funds ("ETFs") seeking to invest in derivatives, including futures, options and swaps.

The announcement lifts a moratorium that has been in place since March 2010 on consideration of such exemptive requests. A March 2010 press release announced that the SEC staff was reviewing the use of derivatives by mutual funds, ETFs and other investment companies. In the press release the SEC indicated that until completion of its review, SEC staff would not consider exemptive applications for ETFs that planned to make significant investment in derivatives. As a result, for over two and a half years the SEC staff refused to consider all actively-managed and leveraged ETF applications that did not expressly state they would not invest in futures, options or swaps.

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