PALM DESERT, Calif. - Federal regulators would “like to codify exemptive relief” from provisions of the Investment Company Act of 1940, in order to be able to focus on the more innovative forms of exchange-traded funds and other investment fund applications in the future, according to Norm Champ, director of the Division of Investment Management at the Securities and Exchange Commission.

This would allow his division, which acts as the “laboratory of the SEC as far as asset management” is concerned, to focus on applications to create “innovative products” as opposed to “plain vanilla products,’’ he said in a panel discussion at the Investment Company Institute’s annual Mutual Fund and Investment Management Conference here.

“One of our goals is to free up people,’’ he said, “to spend more time on innovative applications and less time on run-of-the-mill” applications.

The division, he noted, has 10 employess currently allocated to approving exchange-traded fund applications for exemptive relief from the ’40 Act, in order to form their funds.

ETFS currently must seek exemptive relief from various provisions of the Investment Company Act of 1940 that would not otherwise allow the ETF structure. Until 2008, such relief was granted only to ETFs that passively tracked designated indexes.

In early 2008, the SEC granted exemptive relief to several fund sponsors to offer actively managed ETFs that meet certain requirements and disclosed their holdings, clearly, each business day on public sites.

In 2008, the commission also proposed a rule that would basically codify exemptive relief that the SEC routinely grants for exchange-traded funds, Champ noted.

This would allow ETFs to operate without obtaining individual exemptive relief, according to Champ.

The investment management division is renewing efforts to get such a codification instituted as a formal rule.