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.”
[related_stories]The simplified listing process for actively managed ETFs could be a boon for smaller fund managers seeking an entry into the ETF space as a means to quickly attract assets through the easy-to-use and efficient investment vehicle.
While the ETF industry first started up a little over two decades ago, it took 15 years before the first actively managed ETF hit the market, and active ETFs still only make up a fraction of the overall U.S. ETF industry.
There are 1,945 U.S.-listed exchange traded products with $2.375 trillion in assets under management, according to XTF data. However, there are only 149 actively managed U.S.-listed ETPs with $26.3 billion in assets.
Related: Nuveen Files Plans for Aggregate Bond ETF
“The NYSE is committed to reducing complexity in US markets to benefit issuers, market participants and investors,” Doug Yones, head of exchange traded products at NYSE, told the Financial Times.