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K&L Gates represents index-based, leveraged and actively managed exchange-traded funds (ETFs), their sponsors, and boards of directors in all legal aspects of designing, developing, organizing, registering and operating ETFs. Our clients include ETFs that invest in equity and fixed-income securities as well as commodities-referenced exchange-traded products.

We regularly obtain routine and novel exemptive relief for our ETF clients from the SEC and CFTC. Our ETF team represents a multi-disciplinary approach to servicing out ETF clients to ensure that they receive prompt and effective advice to address issues, including those concerning federal securities and commodities laws, tax laws, intellectual property protection, broker-dealer regulation, derivatives and fund financing, exchange listing standards and state corporate/trust laws. Many of our team members are former SEC staffers, including from the Divisions of Investment Management and Enforcement.

Our team monitors business trends and legal developments to help our clients remain competitive in a rapidly changing environment. Our ETF team members are well versed in the business, regulatory, and compliance issues surrounding ETF operations, including the ETF share creation and redemption process, ETF marketing, ETF seed capital arrangements, ETF share trading, portfolio management and index construction and licensing.

Our ETF team has participated in a number of firsts in the ETF industry, including:

  • The first actively managed ETFs that use traditional, non-quantitative techniques;
  • The first ETF sponsor to obtain “manager of managers” relief from the SEC;
  • The first NYSE Arca-listed physically back platinum, palladium and mixed precious metals exchange-traded products; and 
  • The first IRS private letter ruling permitting gains derived from options and futures contracts on gold to constitute qualifying income for an ETF, as a regulated investment company, where the ETF entered into these contracts to hedge investments in securities of gold mining companies.

We have also represented broker-dealers that serve as “authorized participants” (APs) of ETFs and assisted our clients with cross-listings around the world.

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Advised major U.S. financial services company on entry into ETF market and establishment of ETFs and related authorized participant and other arrangements
Established physically-backed precious metals exchange-traded products, including obtaining necessary SEC approvals for registration, SEC reporting, tax issues, as well as formation, maintenance, and in some cases closing and winding up of these products. This work involved advising on the development of the first platinum, palladium and mixed metals exchange-traded product in the U.S.
Advised Puerto Rican investment adviser regarding redomiciliation of adviser and reorganization of ETF out of turnkey trust into proprietary trust
Advised financial media personalities regarding the launch of their first ETFs and related marketing and distribution efforts
Advised numerous ETFs and their sponsors regarding responses to routine and sweep examinations by the SEC’s Office of Compliance Inspections and Examinations
Advised multiple new ETFs and their sponsors regarding the establishment and launch of ETFs, including advice on establishing and/or maintaining Delaware trusts, obtaining active and index-based ETF exemptive relief, registering the ETFs with the SEC, obtaining exchange listings, SEC filings and ongoing compliance, and board-related matters
Assisted ETF manager with transitioning index provider relationships and related intellectual property involving both UK/ European and U.S. affiliates
Advised China-focused ETF manager regarding various issues related to the operation and management of Chinabased strategies
Advised various sponsors of proposed short and ultra-short duration bond ETFs regarding SEC positions and regulatory issues related to such offerings
Advised various sponsors of proposed short and ultra-short duration bond ETFs regarding SEC positions and regulatory issues related to such offerings