Oct. 22 (Bloomberg) -- The U.S. Securities and Exchange Commission rejected plans by BlackRock Inc. and Precidian Investments to open a new type of exchange-traded fund that wouldn’t disclose holdings daily, setting back efforts by money managers to bring more actively managed ETFs to market.
The SEC issued a preliminary decision on BlackRock’s September 2011 and Precidian’s January 2013 requests for exemptive relief from the Investment Company Act of 1940, according to letters dated yesterday. The decision puts on hold plans by the firms to start the first non-transparent ETFs.
The Precidian proposal falls “far short of providing a suitable alternative to the arbitrage activity in ETF shares that is crucial to helping keep the market price of current ETF shares at or close” to its net asset value, Kevin O’Neill, a deputy secretary at the SEC, wrote in the letter.
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