Citing significant growth in the size and scope of exchange-traded products (ETPs), on June 12, 2015, the SEC focused its attention on ETPs, including exchange-traded funds (ETFs), non-1940 Act pooled investment vehicles, and exchange-traded notes (ETNs).
In a 51-page request for comment, the SEC said it is seeking information to assist in its review of the listing and trading of “new, novel, or complex ETPs, including requests by ETPs for exemptive and no-action relief. . . .” While the SEC acknowledges its extensive experience with ETPs, it believes that engaging with the broader public and investment community will be beneficial to its continued oversight.
Not included in the request, however, are solicitations for comments with respect to exchange-traded managed funds (ETMFs), as the SEC notes that ETMFs “operate differently from existing ETPs” and do not yet list or trade on an exchange.
Of particular interest to the SEC are comments with respect to its oversight of ETPs under the Securities Exchange Act of 1934 (“Exchange Act”), including:
- views on the listing and trading of ETPs;
- the manner in which ETPs trade in the secondary market; and
- exemptive or no-action relief granted to ETPs under the Exchange Act.
The SEC is also interested in receiving comments on how broker-dealers:
- recommend and sell ETPs to investors; and
- fulfill their obligations to investors when recommending and selling ETPs, in light of FINRA’s existing guidance regarding complex products and ETPs.
Comments will be due 60 days following the request’s publication in the Federal Register.