March 25, 2008 at 2:00 pm by Tom Lydon
Now that the Securities and Exchange Commission (SEC) has proposed its rules changes for the way exchange traded funds (ETFs) are brought to market, a two-month period for public comment is under way.
Murray Coleman for Index Universe says the proposal was made on March 4 to change two key rules. Industry observers say that several issues could prevent the changes from going into effect anytime soon.
The problem with launching ETFs now, some say, is that the process is redundant and a wasteful use of the SEC’s resources. The sponsors don’t want to take a ton of time putting together 100-page applications that are cut-and-dried, while the SEC staff doesn’t want to read the same thing over and over.
One question is whether the new rules would extend to the new breed of actively managed ETFs, and that’s the debate that could hold up the implementation of the rules. The concern is that with active ETFs, people could wind up paying more for ETFs than they should. Without a mandate from the SEC, says one expert, coming up with fair pricing in ETFs is going to become like the next Wild West.
