Aggregated News From Investment Management Regulators

SEC Adopts Amendments to Exemptive Applications Procedures


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The Securities and Exchange Commission today announced that it has voted to adopt rule amendments to establish an expedited review procedure for exemptive and other applications under the Investment Company Act that are substantially identical to recent precedent, as well as a new informal internal procedure for applications that would not qualify for the new expedited process. These actions are intended to make the application process more efficient as well as to provide additional certainty and transparency regarding the process.

“The application process under the Investment Company Act is an important component of our regulatory structure. The process provides economic benefits to fund shareholders, expands investor choice, and facilitates innovation in the asset management industry, all with a steadfast commitment to transparency and investor protection,” said SEC Chairman Jay Clayton. “The changes approved today will modernize and streamline this process, resulting in improved transparency, reduced costs, and a more efficient use of our staff’s resources.”

These new procedures will be effective 270 days following their publication in the Federal Register.

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Amendments to Procedures with Respect to Applications Under the Investment Company Act of 1940

The Commission regularly receives applications seeking orders for exemptions or other relief for funds under the Investment Company Act. For example, many funds have historically required an exemption in order to operate, such as exchange-traded funds, and other funds have sought exemptive relief in order to operate in a more efficient and less costly manner. Rule 0-5 under the Act sets forth the procedure for applications seeking such exemptive orders. Granting appropriate exemptions from the Act can provide important economic benefits to funds and their shareholders, foster financial innovation, and increase the diversity of opportunities for investors.

The SEC today adopted amendments to rule 0-5 to, among other things, establish an expedited review procedure for certain applications and establish an internal timeframe for review of applications outside of the expedited procedure. The amendments are intended to grant relief as efficiently and quickly as possible, while also ensuring that applications continue to be carefully analyzed consistent with the relevant statutory standards. A more efficient application process will allow applicants to realize the benefits of relief more quickly than otherwise would be the case; and fund shareholders will generally share in these benefits. The new expedited review procedure will also make the applications process less expensive for applicants, and will ensure that Commission staff can devote additional resources to the review of more novel requests.


Expedited Review Procedure for Routine Applications  

  • The amendments to rule 0-5 under the Investment Company Act establish an expedited review procedure for routine applications that are substantially identical to recent precedent.
    • Expedited review will be available if the application is substantially identical to two other applications for which an order granting the relief has been issued within three years of the date of the application’s initial filing.
    • Notice for an application filed under expedited review will be issued no later than 45 days from the date of filing unless the application is not eligible under the rules or additional time is necessary for appropriate staff consideration.
    • An application for expedited review will be deemed withdrawn if the applicant does not respond to comments from SEC staff within 30 days.

Procedure for Other Applications  

  • The amendments to rule 0-5 under the Act will deem an application outside of expedited review withdrawn when the applicant does not respond to comments from SEC staff within 120 days.
  • New rule 17 CFR 202.13 establishes an internal timeframe for staff to take action on applications outside of expedited review within 90 days of the initial filing and each of the first three amendments thereto, and within 60 days of any subsequent amendment.

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Regulator Information

Abbreviation: SEC
Jurisdiction: United States

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