MFDF Files Comment Letter on Novel ETFs

On August 31, MFDF submitted a comment letter to the Securities and Exchange Commission (SEC) regarding the staff’s Request for Comment on Novel ETFs. The Request highlighted several issue areas touching these newer ETF products and concerns surrounding the current regulatory framework. The Request, which is not a proposed rulemaking, seeks feedback from stakeholders and investors on questions these novel ETF products bring to the surface. Questions from the Commission staff include investment company determinations, possible amendments to the ETF rule, registration statement review procedures, among other topics.

MFDF’s comment letter encouraged the Commission to better delineate what types of traded vehicles are eligible for RIC status under the Investment Company Act of 1940 and which fall under other regulatory schemes. Clarity for investors also would be enhanced by limiting the vehicles that can call themselves “ETFs” only to funds that are registered under the Investment Company Act. MFDF also encourages the Commission to consider requiring disclosure of material unresolved staff comments to the fund’s board before the fund’s registration statement becomes effective. MFDF’s letter acknowledges that fund directors play an important role for investors in the registered fund space. The letter emphasizes, however, that fund boards and independent directors are not and should not be responsible for determining whether the funds that they oversee qualify to register under the Act – that responsibility belongs primarily to fund management and fund counsel. MFDF looks forward to engaging with the Commission staff further on this issue.

Click here to view MFDF’s letter on the SEC’s Request for Comment on Novel ETFs.

Click here to view the SEC’s Request for Comment on Novel ETFs.

Click here to view a K&L Gates client alert concerning the SEC’s Request.