Federal Register: SEC Proposes Changes To ETF Approval Process

The SEC proposal to adopt a new rule that would modify the approval process for certain exchange-traded funds ("ETFs") was published in the Federal Register. Comments must be submitted by October 1, 2018.

As previously covered, proposed Investment Company Act Rule 6c-11 would enable open-ended ETFs to come to market without applying for an exemptive order. Certain ETFs would not be able to rely on the rule, including ETFs organized as unit investment trusts ("UITs"), leveraged ETFs, inverse ETFs and ETFs organized as the share class of a multi-class fund. ETFs that qualify for the exemptive rule would be required to meet certain conditions.

The proposal also includes amendments to disclosure obligations for funds organized as UITs.