Notably, the distinction between open-ended funds and UITs – which is substantially a matter of fund governance – means that many of the oldest and most established products are actually not … The Rule eliminates the proposal to require examples in an ETF’s prospectus showing how bid-ask spreads would impact the return of a hypothetical investment. In 2015, the SEC re-issued a request for public comment on the need for and the construction of a new ETF rule proposal. [10] Proposed Amendments to Form N-1A The Proposing Release also proposes amendments to Form N-1A for both mutual funds and ETFs. In the coming months the SEC is planning to launch the ‘ETF Rule’ (6c-11), which will bring a purpose built regulatory framework to the ETF industry. Between 2007 and 2018, the median processing time from filing to approval was 221 days. ET. %PDF-1.6 %���� Officials from the U.S. Securities and Exchange Commission met with the twins on Feb. 14 to discuss their proposal for an ETF based on the digital currency, according to a … The SEC ruled that there will be no differentiation in the rule set between active and passively managed ETFs. Our Investment Management practice attorneys represent participants in all aspects of the dynamic investment management industry. The Proposed Rule is not meant to be exclusive, therefore the SEC will continue to consider applications for new ETFs that cannot satisfy the Proposed Rule’s requirements. The proposed rule would provide an updated and more … In addition, the Proposed Rule would rescind the exemptive orders for any existing ETF that would fall within the scope of the Proposed Rule.ETFs that meet the Proposed Rule’s specific conditions would: 1. re… According to footnote 210 of the proposal, an ETF would not be permitted to reflect portfolio changes on anything but a T+1 basis. BlackRock submitted a detailed comment letter in response to the proposed Rule 6c-11 in September 2018. endstream endobj 164 0 obj <>/Metadata 12 0 R/Pages 161 0 R/StructTreeRoot 24 0 R/Type/Catalog>> endobj 165 0 obj <>/MediaBox[0 0 595.44 841.68]/Parent 161 0 R/Resources<>/Font<>/ProcSet[/PDF/Text/ImageC]/XObject<>>>/Rotate 0/StructParents 0/Tabs/S/Type/Page>> endobj 166 0 obj <>stream /J�'��. The SEC has proposed new a new rule that would make it easier for leveraged and inverse ETFs to come to market. The Rule permits all ETFs eligible to rely on it to utilize custom purchase and redemption baskets (i.e., baskets composed of a non-representative selection of the ETF’s holdings OR any basket that differs from any other basket used by the ETF that day). in certain limited circumstances, pay authorized participants the proceeds from the redemption of shares in more than seven days. h�bbd```b``��5 �i�T�"��H�c �EL�����,0�lB����3���Ƃ�!�`3;��Mc 233 0 obj <>stream In 2008, the SEC proposed a rule that would have applied to index-based ETFs and codified certain standard conditions, but it was never finalized in the midst of the economic downturn. ETFs that meet the Proposed Rule’s specific conditions would: Conditions for Reliance on Proposed Rule 6c-11. The Rule eliminates the proposal to require an interactive calculator on an ETF’s website allowing an investor to customize hypothetical bid-ask spread calculations. Growth in U.S. ETF assets could receive a boost from planned rule *As of June 26 Clayton has made passing an ETF rule a priority since he took the helm at the SEC in May 2017. 33140 (June 28, 2018) [83 FR 37332 (July 31, 2018)] (“2018 ETF Proposing Release”). September 27, 2019. �l���-�֢Z�i��j�"�D/����q���5Ǥ���mW���c�I�����,���%��5�Ϗ�������uF� ?����B�;�1�#��� �·P�=T��������N�Uj1���}>��{#,��፴��ul&'�.&�J��t.z������X�.�E�e�1���4I��)�2g~G��;S=�K� The Proposed Rule contains the following five core conditions that if met, would allow for an ETF to take advantage of the relief outlined above: The Proposed Rule does not include several ETF-related issues that current exemptive orders have included or addressed: Comments on the Proposed Rule are due October 1, 2018. 163 0 obj <> endobj 0 “We … [1] Rule 6c-11 (Rule) under the Investment Company Act of 1940 (1940 Act) is designed to modernize the regulation of ETFs, whose … The proposed rule and rule amendments (collectively, the “ETF Rule”) would substantially replace the current regime under which each ETF sponsor is required to obtain, and subsequently rely upon and comply with, its own individual exemptive relief from certain provisions of the 1940 Act in order to offer and operate an ETF. If adopted as proposed, the proposed rule would significantly alter the regulatory landscape for ETFs and level the playing field for both existing ETF sponsors and new entrants in the ETF market, as … We believe the proposal is thoughtful and will benefit ETF investors and the ETF ecosystem. Proposed Rule 6c-11 (the “Proposed Rule”) would impose a more streamlined process for new ETFs, and create more standardized compliance requirements for existing ETFs. The SEC’s proposed rule 6c-11 (under the 40 Act) seeks to address this problem by harmonizing requirements for all ETFs structured as open-ended investment companies. The New ETF Rule: Initial Impressions. The Proposed Rule would be available to ETFs that are organized as open-end funds, including both index-based and actively managed ETFs. The Securities and Exchange Commission has voted to propose a new rule designed to enhance the regulation of the use of derivatives by registered investment companies, including mutual funds, exchange-traded funds (ETFs) and closed-end funds, as well as business development companies. The SEC also estimates that the cost for a typical ETF filing for exemptive relief is $100,000. This is the first in a series of posts on the new Proposed Rule, its requirements, and next steps for the Proposed Rule. It would not be available for leveraged-ETFs or ETFs formed as unit investment trusts (“UITs”). Thus, under the proposed rule, an ETF’s premium/discount is the difference between NAV and the ETF shares’ official closing price or the midpoint of the NBBO at, typically, 4:00 p.m. �day��a"u��a����S$�{FR��@�B�sؼ�"Y�*��6��/�&D�ܦf��&�wظ��W)R���R�I�L���J�U���5��k*EM��BIO�J�i��*F��g#� ����ZД�ǜ�Rb�bu������_L^c��efᗫ������O��z�̨��|aT�w��B���U Proposed rule 6c-11 would permit ETFs that satisfy certain conditions to operate within the scope of the Investment Company Act of 1940 (the “Act”), and come directly to market without the cost and delay of … Michael Sapir, chairman of ETF manager ProShares, said the proposed rule could lead more advisers to stop selling leveraged ETFs altogether. The SEC had originally proposed a rule codifying its exemptive order conditions in 2008. redeem shares only in creation unit aggregations; permit ETF shares to be purchased and sold at market prices rather than at net asset value (“NAV”) per share; engage in in-kind transactions with certain affiliates; and. The SEC blessed the first ETF in 1992, and since then, the SEC has issued over 300 ETF exemptive orders. As proposed, the rule effectively eliminates any meaningful distinction between index and active ETFs, and this is a good thing. Interactive calculator . endstream endobj startxref 24The Proposed Rule defines an “authorized participant” as “a member or participant of a clearing agency registered with the [SEC], which has a written agreement with the [ETF] or one of its service providers that allows the authorized participant to place orders for the purchase and redemption of creation units.” Rule 6c-11(a). Proposed Rule 6c-11 would codify much, but not all, of the Relief contained in existing exemptive orders granted to ETFs to operate as ETFs (“Prior ETF Orders”). The Commission voted to adopt a new rule and form amendments designed to modernize the regulatory framework for exchange-traded funds (“ETFs”). New proposals from the U.S. securities watchdog aimed at reducing risks in exchange-traded funds (ETFs) may end up being the best thing that ever happened to rival exchange-traded notes (ETNs). In addition, the Proposed Rule would rescind the exemptive orders for any existing ETF that would fall within the scope of the Proposed Rule. The US Securities and Exchange Commission (SEC) unveiled in final form the regulatory framework that will govern the operation of most exchange-traded funds (ETFs) going forward. It would not be available for leveraged-ETFs or ETFs formed as unit investment trusts (“UITs”). h�b```����B ���������a�6��S�`�c�@w��Sˎ�l � L@� W�Lw���"��Ebu�p�z�6A����ٖ݊���-� L��5vr�/0]a4c�ΐΠ� � ``� ���#�ƿ�c�r`��b`�` ��� �fd`�R|���`.�� �_+O Very supportive of the Proposed Rule 6c-11 in September 2018 managed ETFs net assets, exemptive! 7 See Exchange-Traded Funds, including both index-based and actively managed ETFs and will benefit ETF investors the... 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