The Securities and Exchange Commission said Thursday that it adopted a new rule to modernize the regulation of exchange-traded funds by establishing a clear and consistent framework for the vast majority of ETFs operating today — eliminating the need for most of them to seek exemptive relief before coming to market.
Adoption of the long-awaited rule will facilitate greater competition and innovation in the ETF marketplace, leading to more choice for investors, the SEC says.
Dalia Blass, head of the SEC’s investment management division, said in March that the division planned to finalize rules on ETFs and funds of funds this year.
The commission also voted Thursday to issue an exemptive order that further harmonizes related relief for broker-dealers.
“As the ETF industry continues to grow in size and importance, particularly to Main Street investors, it is important to have a consistent, transparent and efficient regulatory framework that eliminates regulatory hurdles while maintaining appropriate investor protections,” said SEC Chairman Jay Clayton, in a Thursday statement.
Since 1992, the commission has issued more than 300 exemptive orders allowing ETFs to operate under the Investment Company Act.