June 18, 2019

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SEC Proposes New Approval Process for Certain ETFs

On June 28, the Securities and Exchange Commission voted to propose a new rule and set of form amendments related to the approval process for certain exchange-traded funds (ETFs) that operate as open-ended funds (Proposal). Among other things, the Proposal calls for the creation of a new rule 6c-11 of the Investment Company Act of 1940 (Investment Company Act) that would allow ETFs that satisfy certain conditions to operate within the scope of the Investment Company Act and to come to market without applying for individual exemptive orders. Such proposed conditions include, but are not limited to, an ETF being required to provide daily portfolio transparency and historical information regarding premium discounts and bid-ask spreads on its website. The Proposal also calls for amendments to Form N-1A (the form used for purposes of registering ETFs structured as open-ended funds) and Form N-8B-2 (the form used for purposes of registering ETFs structured as unit investment trusts) to provide additional ETF-specific information that can be used by investors. The comment period for the Proposal will be open for 60 days after its publication in the Federal Register.

The press release announcing the Proposal is available here.

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About this Author

Janet M. Angstadt, Securities, Financial Services, Chicago, Lawyer, Katten Law FIrm

Janet M. Angstadt is the head of Katten's Chicago Financial Services practice. She focuses her practice on broker-dealer and exchange compliance issues and advises companies on matters regarding compliance with the regulations of the US Securities and Exchange Commission (SEC) and self-regulatory organizations (SROs).

Janet represents clients in a wide range of legal and regulatory matters, including mergers and acquisitions, SRO investigations, compliance issues related to registrations, sales practice, short sales, Regulation NMS, market-making and...

Stanley V. Polit, Katten Muchin, Financial Services lawyer, Corporate Regulatory Matters Attorney

Stanley Polit concentrates his practice in transactional, corporate and regulatory aspects of financial services matters. Stan is able to provide legal services to a wide variety of clients including proprietary trading firms, hedge funds, broker-dealers, registered investment advisers, commodity trading advisers, financial institutions and general corporate clients.

Prior to joining Katten, Stan served as a council member for a national crisis management firm, where he specialized in crisis communication and merged media strategies. He has lectured extensively and conducted trainings related to these topics at numerous national and international conferences, including the National Communication Association's National Convention, the International Crisis and Risk Communication Conference and the Disaster Recovery Journal's World Business Continuity Conference.