The SEC lifted the moratorium on derivatives in active ETFs last December. The ban began in March 2010 and left some applications in a holding pattern for two years or more as they waited for exemptive relief. [Several Fund Firms Eyeing Active ETFs]
“OTC derivatives are very hard to monitor because there is no centralised exchange to get the information from – that’s where actively managed ETFs can get held up,” Richard Keary, principal and founder of Global ETF Advisors, said in the article. “The SEC likely wants to make sure the exchange can monitor all the components of this product to prevent disruptions. It’s a legitimate regulatory concern.”
According to ETFGI, active ETFs and ETPs make up less than 1% of the market globally.
For more information on active funds, visit our actively managed ETFs category.
Max Chen contributed to this article.