May 19, 2014 / 2:50 PM / 3 years ago

BlackRock advances in pursuit of ETFs with non-daily disclosure

3 Min Read

NEW YORK, May 19 (Reuters) - BlackRock Inc, the largest U.S. provider of exchange-traded funds, has moved a step further in its pursuit of launching a new breed of ETFs that would be allowed to keep their specific holdings under wraps for months at a time, instead of the daily disclosure that is currently required.

A filing late on Friday from BATS Global Markets, seeking approval from the U.S. Securities and Exchange Commission to be able to list and trade shares of some funds, is tied to a trust that BlackRock plans to use to launch these so-called "non-transparent" active ETFs.

The funds in the BATS filing include 13 potential BlackRock iShares non-transparent active ETFs, mainly large and mid-cap equity funds. Such funds, if approved, would be allowed to report their holdings on a quarterly basis, putting them on par with traditional mutual funds.

The BATS filing, known as a Form 19b-4, is required in order for such actively managed funds to be listed on an exchange. It follows an earlier proposal submitted in September 2011 by BlackRock asking the SEC to allow them to build such funds. For BlackRock to be able to launch non-transparent active ETFs, both proposals would need to be approved.

BlackRock and BATS declined to comment on the filing.

Currently, all ETFs, both active and passive, are required to disclose their holdings daily. This allows the funds' market makers to make trades that keep the fund's share price in line with the value of its underlying assets. But for actively managed funds, which often gain a reputation based on a manager's winning investment philosophy, daily transparency could allow others to "front-run" the active manager.

Firms say non-transparent ETFs will allow them to use sophisticated investment strategies without having to reveal the fund manager's secret sauce.

Several other large asset managers, including State Street Corp and Eaton Vance Corp, have also asked the SEC to let them market such actively managed ETFs.

So far, none of the proposals have won SEC approval. (Reporting by Ashley Lau in New York; Editing by Tom Brown)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below