As liquidity risks become an increasing concern for fund firms, interfund lending has become increasingly popular as an option to address these risks. However, the pace of SEC approvals of interfund lending applications is limiting their adoption. Ignites quotes investment management partner, Brian McCabe, opining that because the SEC staff had not announced any formal moratorium on such orders, as it had in connection with its 2010 moratorium on exemptive relief for actively-managed ETFs seeking to invest in derivatives, such orders may be forthcoming soon and suggesting that, given recent liquidity concerns, interfund lending should be permitted as broadly as possible.
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