SEC's Proposed Rule 6C-11 Would Level The ETF Playing Field

The Securities and Exchange Commission on June 28, 2018 proposed a long-anticipated rule that would allow most exchange-traded funds (ETFs) to operate and come to market without applying for individual exemptive orders. If adopted as proposed, rule 6c-11 would amend and rescind the exemptive relief issued to ETFs that would be permitted to rely on the proposed rule.

The SEC carved out leveraged ETFs from the exemptive rule proposal. That is, ETFs that seek, directly or indirectly, to provide returns that exceed the performance of a market index by a specified multiple or to provide returns that have an inverse relationship to the performance of a market index ("negative-beta" ETFs) could not rely on the exemptive rule, and would continue to rely on existing orders.