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SEC partially lifts moratorium on actively managed ETFs

Dec 07 2012 Jessica Toonkel, Reuters

The U.S. Securities and Exchange Commission is partially lifting an almost three-year-old moratorium on applications for actively managed, exchange-traded funds, creating an opportunity for fund managers to use derivatives when they launch them. Exchange-traded funds, or ETFs, are similar to mutual funds, but trade on exchanges on a real-time basis. Only 37 of 1,267 ETFs in the United States are actively managed, according to Lipper, a subsidiary of Thomson Reuters Corp. They represent 0.93 percent of the $1.2 trillion in assets in U.S. ETFs. In March 2010, when the SEC began reviewing the risks posed by how mutual funds and ETFs used derivatives, the commission placed a moratorium on all applications from firms looking to open ETFs that used such instruments, including credit default swaps. On Thursday, the director of the SEC's investment management division, Norm Champ, told a conference hosted by The American Law Institute Continuing Legal Education

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