SEC, Precidian Pave the Way for Non-transparent, Active ETFs

Since 2014, Precidian Investments has sought Securities and Exchange Commission (SEC) approval for a new kind of active exchange-traded fund (ETF) that does not disclose its daily holdings. No longer.

On April 8, the SEC gave Precidian Investments contingent approval to license its ActiveSharesSM actively-managed, non-transparent ETF structures – the first ETF of its kind to gain initial approval by the SEC. The approved filing limits ActiveShares ETFs to holdings listed on US exchanges that trade during the same hours as the ETF. The approval, which will come on May 3 barring any public objections, may open doors to new product types.

We discuss the features of this new structure and highlight key considerations for managers: Read more here.

The SEC’s decision is also interesting when viewed from a global perspective. Last year, the Central Bank of Ireland declined to approve a non-transparent ETF model. IOSCO is also planning to look at non-transparent ETFs in the future. This US development could add momentum on a global basis, representing a new opportunity for asset managers.