SEC Modernizes Regulations of Exchange Traded Funds–Eases Regulatory Burdens, Reduces Cost, Time to Market for New ETFs

SEC Modernizes Regulations of Exchange Traded Funds–Eases Regulatory Burdens, Reduces Cost, Time to Market for New ETFs

On Thursday, September 26th, the SEC passed a long-awaiting ruling that differentiates ETFs from mutual funds from a regulatory perspective. The new regulations will reduce costs and substantially decrease the time in which new ETFs can be approved. The rule is expected to facilitate greater competition and innovation in the ETF marketplace, leading to more choices for investors.

Rule 6c-11 will permit ETFs that satisfy certain conditions to operate within the scope of the Investment Company Act of 1940 to come directly to market without a costly and time-consuming exemptive order, which will lower the barriers to entry. Rule 6c-11 will be available to ETFs organized as open-end funds only. ETFs subject to the Rule will be required to publish daily portfolio holdings on their websites along with other information, including premiums/discounts to NAV, bid-ask spreads and other information on how ETFs operate.

The Rule will become effective 60 days after publication in the Federal Register. You can read the full press release and Fact Sheet issued by the SEC via this link.