“A delay of three months costs us money, ” Noah Hamman, chief executive of AdvisorShares, said in the article. “It’s still putting active ETFs with one arm tied behind [their]back relative to the index ETF space.”
If approved, the proposal could expedite 85% to 90% of active ETFs going through regulatory hurdles, according to Laura Morrison, global head of index and ETPs at NYSE Arca.
One reason why it has taken this long to draft a generic listing standard for active ETFs may have to do with derivatives. The use of derivatives was previously banned in new ETF launches, but the Division of Investment Management lifted a moratoroium on derivatives for active ETFs in 2012. Meanwhile, Trading and Markets kept close tabs on derivatives use in active ETFs.
The proposed rule change will not affect other exchanges, so Nasdaq and BATS exchange listings will still have to go through the 19b-4 process.
There are currently 120 U.S.-listed actively managed ETFs on the market with $18.1 billion in assets under management, which makes up less than 1% of the overall U.S. ETF industry at 1,654 listed products with $2.02 trillion in assets under management, according to XTF data. [Active ETFs Help Drive First Trust’s Growth]
For more information on the active ETF space, visit our actively managed ETFs category.
Max Chen contributed to this article.