ETF investors get ASIC relief

Investors in the string of exchange traded funds (ETFs) offered byState Street global Advisors(SSgA) on the Australian stock exchange have been granted an exemption from the takeover and substantial holder notice provisions of the Australian Corporations Act.

The exemption, which was awarded by theAustralian Securities and Investments Commission(ASIC), will apply to investors in SSgA’s streetTRACKS S&P/ASX 50, streetTRACKS S&P/ASX 200 and streetTRACKS S&P/ASX 200 Listed Property Fund ETFs for a period of two years.

Under the exemption, a holder of more than 20 per cent of units in any one of the funds will no longer be required to comply with some of the takeover provisions the Corporations Act.

A holder of more than 5 per cent of units in any of the funds will also no longer be required to lodge a substantial holder notice with ASIC every time there is a 1 per cent change in their unit holding or their holding falls below 5 per cent. Instead, such investors will only have to lodge a substantial holder notice every six months.

SSgA director James MacNevin says the relief granted by ASIC reflected the unique nature of ETFs.

“The funds have a primary market mechanism which allows units to be issued to and redeemed by eligible investors,” he says.

“From time to time this involves large unit holdings which could trigger the takeover and substantial holder notice provisions. Relief from these provisions will allow the funds to operate as intended with an efficient trading structure.”

ETFs are essentially managed funds that can be traded, like shares, on a stock exchange.