A Level Playing Field: ETF Regulation Enters the Modern Era

Roughly a decade in the making, the US Securities and Exchange Commission’s (SEC) ETF Rule will make bringing an ETF to market faster and less expensive.

Earlier today, the SEC passed perhaps one of the most anticipated ETF regulations to date: The so-called “ETF Rule.” The ETF Rule (formally known as Rule 6c-11) represents a seismic shift for both incumbent and prospective ETF issuers, with impacts spanning much of the ETF ecosystem. Most importantly, provisions under the new rule modernize how ETFs are regulated and may spur greater efficiency and potentially lower costs. The rule will now allow asset managers to bring certain types of ETFs to market without gaining exemptive relief, which could lower the barrier of entry by making ETF issuance less cost prohibitive. It’s important to note that the rule excludes: master-feeders, levered/inverse, unit investment trust (UIT) and ETFs as a mutual fund share class. Nor does the rule cover non-40 Act registered exchange-traded products (ETPs).

In this edition of Exchange Thoughts, BBH’s ETF Newsletter, we discuss the features of the ETF Rule and highlight key considerations for managers. Read the full article here.