Abstract
On September 26, 2019, the Securities and Exchange Commission (SEC) adopted final Rule 6c-11, which replaces the previous regulatory regime for many exchange-traded investment funds (ETFs). This article details the background of the new rule, its provisions, and its benefits for the ETF industry. The rule became effective on December 23, 2019.
TOPICS: Exchanges/markets/clearinghouses, exchange-traded funds and applications
Key Findings
• The Rule covers both standard transparent active ETFs and index ETFs, allowing issuers to quickly launch and operate new products without the significant delay of first obtaining an exemption order from the Securities and Exchange Commission.
• The Rule incorporates most of the important terms, conditions, and relief granted in existing standard ETF exemption orders and is expected to aid future innovation and competition by lowering the cost barriers to entry.
• The Rule expands the circumstances under which custom ETF creation and redemption portfolio baskets can be used, providing flexibility in portfolio management and operations.
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Jump to section
- Article
- Abstract
- BACKGROUND
- RULE 6C-11
- REQUIRED CONDITIONS FOR RELIANCE ON THE RULE
- MOST RELIEF GRANTED IN PRIOR ORDERS IS CODIFIED IN THE RULE
- THE RULE MODIFIES OR EXPANDS RELIEF GRANTED IN PRIOR ORDERS
- THE RULE PROVIDES ETF SHARES WITH CERTAIN EXEMPTIONS FROM THE EXCHANGE ACT
- THE RULE COVERS BOTH PASSIVE AND TRANSPARENT ACTIVE ETFs
- CERTAIN CONDITIONS IN PRIOR ORDERS NO LONGER REQUIRED
- RESCISSION OF EXISTING RELIEF GRANTED IN PRIOR ORDERS
- CERTAIN ETFs NOT PERMITTED TO RELY ON THE RULE
- RECENT INVESTMENT COMPANIES ISSUING EXCHANGE-TRADED SHARES NOT COVERED BY THE RULE
- NON-ETF STRUCTURES ISSUING EXCHANGE-TRADED SHARES NOT COVERED BY RULE 6C-11
- THE RULE DOES NOT APPLY TO EXCHANGE-TRADED NOTES
- CONCLUSION
- ADDITIONAL READING
- ENDNOTES
- REFERENCES
- Info & Metrics
- PDF (Subscribers Only)
- PDF (Subscribers Only)
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