SEC: Agency won't approve ETFs using swaps

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SEC: Agency won't approve ETFs using swaps
WASHINGTON (MarketWatch) -- The nation's top watchdog for the multi-trillion dollar asset management industry said Wednesday the agency has no plans to consider approving any new Exchange-Traded-Funds seeking to make "significant" use of derivatives until the agency completes a broader review of how derivatives are used by all funds. "Although the [SEC's] staff recognizes the competitive impact of the decision to defer the consideration of exemptive relief, the staff is committed to the commission's mission to protect investors," said Eileen Rominger, director of the Securities and Exchange Commission's division of Investment Management in testimony prepared for a Senate Banking Committee hearing. The division's staff announced in March 2010 that they will be limiting their approval of new ETFs that make "significant" investments in derivatives, as the agency evaluates the use of derivatives by mutual funds, ETFs and other investment companies. She noted that a certain small group of so-called "inverse, leveraged ETFs" are made up of derivatives and other securities and can have an effect that that can be magnified in volatile markets.