December 14, 2012 at 09:00 AM EST
SEC Ruling: Active ETFs Now Allowed To Use Derivatives
Though exchange-traded funds have without question revolutionized and democratized Wall Street by allowing average investors to gain cheap and easy access to nearly every corner of the investable universe, there has understandably been some backlash concerning the nuances and uses of these products. And considering the industry’s relatively short history, it is perhaps not surprising that government agencies, namely the U.S. Securities and Exchange Commission, have launched several investigations and reviews into various aspects of exchange-traded products [see 101 ETF Lessons Every Financial Advisor Should Learn]. Back in March of 2010, the SEC began a review of the use of derivatives by ETFs, specifically actively-managed and leveraged funds. Norm Champ, Director of the SEC’s Division of Investment Management, stated that “The use and complexity of derivatives have grown significantly over the past two decades and have given rise to many interpretive and policy issues under the 1940 Act.” But after over [...] Click here to read the original article on ETFdb.com. Related Posts: Highlighting 10 Successful Active ETFs Not Named TRXT One Year Later: EMLC Comes Through For Yield Hungry Investors Talking Actively-Managed ETFs With Tom Graves Of S&P Bond ETF Drawbacks: Case For Active Management In Fixed Income Arena Complete List Of Active ETFs
Though exchange-traded funds have without question revolutionized and democratized Wall Street by allowing average investors to gain cheap and easy access to nearly every corner of the investable universe, there has understandably been some backlash concerning the nuances and uses of these products. And considering the industry’s relatively short history, it is perhaps not surprising that government agencies, namely the U.S. Securities and Exchange Commission, have launched several investigations and reviews into various aspects of exchange-traded products [see 101 ETF Lessons Every Financial Advisor Should Learn]. Back in March of 2010, the SEC began a review of the use of derivatives by ETFs, specifically actively-managed and leveraged funds. Norm Champ, Director of the SEC’s Division of Investment Management, stated that “The use and complexity of derivatives have grown significantly over the past two decades and have given rise to many interpretive and policy issues under the 1940 Act.” But after over [...]

Click here to read the original article on ETFdb.com.

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