On July 29, 2011, the staff of the SEC’s Division of Investment Management issued four no-action letters (the “Letters”) extending to registered investment companies (each a “Fund”) temporary relief from Section 17(f) enforcement actions if a Fund or a Fund custodian places assets in the custody of certain derivatives clearing organizations or certain of their members for purposes of meeting margin requirements for interest rate or credit default swap contracts. Specifically, the Letters permit Funds or their custodians to place and maintain assets in the custody of the Chicago Mercantile Exchange (“CME”), ICE Clear Credit LLC (“ICE”) and LCH Clearnet Limited (“LCH”), each a derivatives clearing organization registered with the CFTC, in addition to certain clearing members associated with each of CME, ICE and LCH that are registered as futures commission merchants with the CFTC. The staff had previously issued no-action letters on the same grounds, which had expired on July 16, 2011; the Letters extend the relief through December 31, 2011. A discussion of the original relief granted can be found here.

Pursuant to the Dodd-Frank Act, the SEC is expected to codify this relief before it expires on December 31, 2011.