Published on Mar 25th, 2020 |

The Securities and Exchange Commission today announced temporary flexibility for registered funds affected by recent market events to borrow funds from certain affiliates and to enter into certain other lending arrangements.

“Today’s temporary action will provide an additional tool that funds can use to manage their portfolios for the benefit of their investors in the current market environment,” said Chairman Jay Clayton.

Subject to these conditions, the order provides the following temporary exemptive relief from the Investment Company Act of 1940:

  • Relief permitting registered open-end funds and insurance company separate accounts to borrow money from certain affiliates
  • Relief that permits additional flexibility under existing interfund lending arrangements and extends the ability to use interfund lending arrangements to funds that do not currently have exemptive relief
  • Relief that permits registered open-end funds to enter into lending arrangements or borrowings that deviate from fundamental policies, subject to prior board approval

This temporary relief will extend until the date specified in a public notice from the staff stating that the relief will terminate, which date will be at least two weeks from the date of the notice and no earlier than June 30, 2020.

To read this full release, see here.