SEC Grants ETF Exemption from Certain Tender Offer Rules

The SEC Division of Corporation Finance granted an exemption to an exchange-traded fund ("ETF") from certain requirements under Securities Exchange Act Rule 14e-5. Substantially similar relief was granted to an ETF on August 23, 2017 (see previous coverage). The exemption permits the following, subject to certain conditions:

• any broker-dealer that acts as the dealer-manager of a tender offer for a security in which the ETF invests may redeem shares in "creation unit" size aggregations for a redemption "basket" that may include a subject security or related security, as defined under Rule 14e-5(c);

• covered persons may engage in secondary market transactions with respect to the ETF's shares after the first public announcement of, and during, the tender offer; and

• covered persons may make purchases of, or arrangements to purchase, subject securities or related securities in the secondary market for the purpose of transferring such securities in order to purchase one "creation unit" or more of shares.