The ability of fund companies to bring ETFs to market under a new relaxed rule from the Securities and Exchange Commission was enhanced this week by SEC approval of a request from the Chicago Board Options Exchange to list such ETFs. The commission previously approved a similar request from Nasdaq.
“This will accelerate approval of Exchange-Traded Fund shares and series of ETF shares that are permitted to operate in reliance on Rule 6c-11 under the Investment Company Act of 1940,” according to analysis by Dechert LLP, a global law firm that works with financial institutions and other industries. The firm expects the NYSE Arca will obtain similar approval in short order.
Rule 6c-11 allows asset managers to bring ETFs to market without filing for exemptive relief for each new fund under the Investment Company Act of 1940 that explains why they are different from mutual funds. They will instead be able to bring new ETFs to market under a single rule so long as the funds satisfy conditions set by the SEC that are intended to promote investor protection.
(Related: New SEC Rule on ETFs Is a Win-Win: Analysts)