On October 7, 2022, the SEC's Division of Corporation Finance issued three new compliance and disclosure interpretations (C&DIs) addressing beneficial ownership determinations for exchange-traded fund (ETF) authorized participants for purposes of reporting under Exchange Act Sections 13 and 16.

Authorized participants, generally large broker-dealers, enter into agreements with ETF issuers where they deposit a designated basket of securities and cash with the fund in exchange for ETF shares (creation) or receive a defined basket of individual securities or cash equivalent from the ETF in exchange for ETF shares (redemption).

For purposes of beneficial ownership determinations under Exchange Act Rules 13d-3 and 16a-1(a)(1), new Exchange Act Sections 13(d) and 13(g) and Regulation 13D-G Beneficial Ownership Reporting C&DI Question 105.07 and Exchange Act Section 16 and Related Rules and Forms C&DI Question 109.02 address an arrangement and relevant conditions that must be met to allow authorized participants to rely on informational barriers to determine whether they are greater than 10% beneficial owners of the ETF's portfolio securities on a disaggregated basis from other accounts of the authorized participant.

New Exchange Act Section 16 C&DI 209.06 addresses how an authorized participant and its parent holding company can avoid being deemed to have a pecuniary interest in a security in the creation or redemption basket for purposes of Rule 16a-1(a)(2).