The Securities and Exchange Commission has granted the NASDAQ Stock Market approval to list Eaton Vance’s (NYSE: EV) exchange traded managed funds (ETMFs). The announcement was made after the close of U.S. markets Friday.
In news that stunned some observers of the exchange traded funds industry and sent shares of Eaton Vance higher by 17% last Friday to the stock’s highest levels in nearly seven years, the SEC late last Thursday approved Eaton Vance’s application for ETMFs, a type of exchange traded product that does not disclose its holdings on a daily basis as most passively managed ETFs do. [Eaton Vance Wins Approval for Non-Transparent ETFs]
That decision marked a sharp reversal from the SEC’s announcement in late October that the Commission had rejected applications by Precidian ETFs Trust and Spruce ETF Trust, a unit of BlackRock (NYSE: BLK), to offer active non-transparent ETFs. [SEC Rebukes Active Non-Transparent ETFs]
Following that October announcement, the SEC also rejected an application by the New York Stock Exchange to list active non-transparent ETFs.
Eaton Vance’s ETMFs, of which up to 18 could debut in the coming months, will trade on the Nasdaq under the NextShares brand.
“The approval of Nasdaq’s rule change request for NextShares caps a pivotal two days in the development of NextShares,” said Thomas E. Faust Jr., chairman and CEO of Eaton Vance, in a statement. “We look forward to continuing our collaboration with Nasdaq to bring NextShares to market.”
ETMFs are a new concept that looks to marry the liquidity and tax efficiencies that have attracted investors to ETFs with active investment strategies, while maintaining the confidentiality of current portfolio trading information.
“Because NextShares will provide market makers with opportunities to earn reliable, low-risk profits without intraday hedging of their fund positions, NextShares can be expected to trade at prices that are consistently close to NAV in the absence of daily portfolio holdings disclosure. Because the trading cost to buy and sell NextShares (premium or discount to NAV) is always explicitly stated, NextShares will provide investors with transparency of entry and exit costs unparalleled among exchange-traded products,” according to Eaton Vance.
Boston-based Eaton Vance had $293.6 billion in assets under management at the end of the third quarter.
ETF Trends editorial team contributed to this post.