Prohibited Transaction Class Exemption for Cross-Trades of Securities by Index and Model-Driven Funds (PTCE 2002-12)

Prohibited Transaction Exemption (PTE) 2002-12 permits private-sector pension plans and the Federal Thrift Savings Plan to buy and sell securities between certain types of investment funds that participate in passive or model-driven “cross-trading” programs pursuant to objective criteria specified in the exemption. The exemption extends only to crossing-trading conducted according to index- or model-driven programs that meet the specific requirements of the exemption, which generally seeks to create objective criteria sufficient to confine or eliminate the manager's discretion to affect the identity or amount of securities to be cross-traded and the timing of cross-trades. The exemption also covers cross-trades among such funds and certain large accounts that engage managers to carry out a specific portfolio restructuring program in order to convert the large account into a fund, or to otherwise act as a “trading adviser” for such a restructuring program. The information collection requirements that are conditions for reliance on the class exemption include third-party disclosures and recordkeeping. The exemption does not require any reporting or filing with the Federal government, but the designated records must be made available to specified parties, including the Department and the IRS, upon request.

The latest form for Prohibited Transaction Class Exemption for Cross-Trades of Securities by Index and Model-Driven Funds (PTCE 2002-12) expires 2028-05-31 and can be found here.