SEC Approves New Continued Listing Standards for ETFs
Since their US introduction in 1993, exchange-traded funds (ETFs) – which have grown to over 1,800 products with holdings of over $2.7 trillion – have operated under exemptive relief from many of the Securities and Exchange Commission (SEC) rules otherwise applicable to mutual funds. New types of ETFs continue to test the limits of ETF regulation and exemptions. As an exchange-traded product (ETP), ETFs are subject to stock exchange rules and listing standards in addition to SEC rules.
While ETFs generally may comply with generic exchange listing standards or standards specific to a particular ETF on an ongoing basis, current practice has required that index ETFs comply only at the time of initial listing. However, under the SEC-approved proposals discussed below, continued monitoring and application of listing standards would be required for all ETFs, which may cause additional compliance costs and obligations. In the midst of a race to the bottom for ETF fees, those additional costs could be significant.