The US Securities and Exchange Commission (SEC) approved the derivatives risk management rule which is designed to provide a comprehensive approach to the regulation of funds’ use of derivatives The new rule 18f-4, permits mutual funds (other than money market funds), exchange-traded funds (“ETFs”), registered closed-end funds, and business development companies (collectively, “funds”) to enter into derivatives transactions. The SEC amended rule 6c-11 “the ETF rule” to allow leveraged or inverse ETFs to operate without obtaining an exemptive order.
Kevin Gustafson, general counsel and CCO and Graham Day, head of product & strategy at Innovator ETFs discuss the background to the rule, what the rule means and how it will impact ETF issuers and investors.
