Precidian ETF Trust II wins SEC exemption change for active ETF custom baskets

Traders Union
All News
Regulators
Precidian ETF exemption change

Highlights

SEC amended its prior exemption for Precidian ETF Trust II, permitting active ETFs to use Custom Baskets without disclosing an Optimized Basket or Overlap measure.
The revised order allows ETFs to substitute cash for restricted instruments in Pro Rata Baskets, enhancing flexibility in portfolio construction for Precidian-managed funds.
The decision, effective May 2026, enables greater operational efficiency for semi-transparent active ETFs while maintaining SEC oversight and investor protection.

SEC order changes active ETF basket rules

Securities and Exchange Commission said the amended order revises a prior exemption under the Investment Company Act of 1940 for actively managed ETFs run without full daily portfolio holdings transparency. The order allows those funds to offer Custom Baskets without first publicly disclosing an Optimized Basket and an Optimized Basket Overlap measure, a condition that applied under the earlier relief.

The amended relief also permits an ETF to substitute cash for an instrument that would otherwise be included in its Pro Rata Basket when the fund or its investment adviser is restricted from trading that instrument. Precidian ETF Trust II and Precidian Funds LLC filed the application on April 25, 2025, followed by amendments on July 30, 2025, December 23, 2025, February 6, 2026, and April 20, 2026.

A notice of the filing was issued on May 11, 2026, under Investment Company Act Release No. 36145. Interested parties were given an opportunity to request a hearing, but no hearing request was filed and the Commission did not order one.

Investor protection findings and market effect

The Commission finds that granting the requested order is appropriate in the public interest and consistent with the protection of investors and the purposes of the Act. It also finds that the terms of the proposed transactions are reasonable and fair, do not involve overreaching, and remain consistent with the policy of each registered investment company concerned.

The immediate effect of the order is to give Precidian-linked actively managed ETFs more flexibility in constructing creation baskets while keeping the structure within existing exemptive conditions in the application, as amended. For the ETF sector, the change may support operational efficiency for semi-transparent active products by easing disclosure requirements tied to Custom Baskets while preserving SEC oversight under the exemptive framework.

Our earlier coverage of Federal Election Commission training webinars highlighted how campaign committees can prepare for upcoming July reporting deadlines through live Zoom sessions on filing rules and the agency’s free FECFile software. The program outlined separate basic and advanced trainings for candidate committees, PACs, and party committees, with staff providing compliance support, demonstrations, and Q&A to improve reporting accuracy.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.