ETF Index Providers: Next in Line on SEC's Regulatory Hit List?

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As more indexers team up with ETF issuers to provide increasingly complex gauges, some observers warn that the combination will attract greater regulatory oversight. Indexers typically rely on a regulatory dispensation known as “the publishers’ exemption” to avoid registering as an investment advisers, which excuses those who distribute advice not tailored to a client or portfolio from the set rules.

“Recent developments appear to have moved certain index providers away from what we might think of as publishers,” Dalia Blass, head of the SEC’s investment management division, said, warning that the industry should not assume index providers qualify for exemptions and should revisit fund disclosure to ensure it is describing these indexes and their strategies clearly.

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