The Securities and Exchange Commission has helped streamline the listing process for actively managed exchange traded funds on the Bats Global Markets and New York Stock Exchange, potentially paving the way for more active ETFs to hit the market.
Bats and the NYSE said they received approval to adopt generic listing standards for actively managed ETFs, reports Nicole Bullock for the Financial Times.
To qualify for the new process, sponsors would be required to structure their ETFs according to a pre-designed template that would include specific checks, like limiting certain types of investments, among others.
Related: 7 Reasons Why an ETF is Today’s Mutual Fund Alternative
Before the new rules, the SEC approved actively managed ETFs on a case-by-case basis, which typically led to a costly and lengthy process that may have put off many small sponsors.
“This is a pivotal moment for the ETF industry as the introduction of these standards will help issuers of all sizes bring innovative funds to the market in weeks instead of months, and with more certainty of approval,” Chris Concannon, chief executive of Bats, told the Financial Times. “Small sponsors of ETFs that don’t have the resources to engage in a lengthy approval process now have some certainty. They can issue products they would not otherwise be able to do.”
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