SEC to Meet Regarding New ETF Rule Change

The U.S. Securities and Exchange Commission will have an open meeting on June 28 to consider a new rule that would expedite the process of bringing an ETF to market.

Currently, issuers hoping to propose a new ETF must first acquire SEC permission, a process known as exemptive relief, before selling funds. Such a process has “inadvertently given some firms a competitive advantage,” which in turn has prompted lobbyist activity for years. Rule 6c-11 was first considered by the Commission in March 2008, although it was not passed.

According to the SEC, rule 6c-11 would “exempt exchange-traded funds (‘ETFs’) from certain provisions of [the Investment Company Act of 1940]and our rules.”  In addition, it “would permit certain ETFs to begin operating without the expense and delay of obtaining an exemptive order from the Commission.” Thus, with the new regulation, ETFs would be allowed to enter the market much more quickly and easily.

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