Rominger Says that SEC is Reviewing ETFs
In testimony before a Senate subcommittee, the SECâ€™s Director of the Division of Investment Management, Eileen Rominger, indicated that the SEC will continue to defer approval of ETFs utilizing derivatives and has commenced a general review of exchange-traded products. Ms.. Rominger said that the SEC will not issue any exemptive order for ETFs â€œseeking to make significant use of derivativesâ€ until it concludes its broader review of fundsâ€™ use of derivatives. The comment period for the outstanding concept release expires November 7. Also, Ms. Rominger said that SEC staff â€œacross multiple Divisions and Officesâ€ is â€œcurrently engaged in a general reviewâ€ of exchange-traded products including ETFs. According to Ms. Rominger, the SEC is reviewing disclosure, liquidity, valuation, and market volatility.
OUR TAKE: Ms. Romingerâ€™s comments might explain why issuers may have to wait years to get exemptive relief and why the SEC never finalized its proposed rule that would allow plain vanilla ETFs without exemptive relief.