On March 4, the Securities and Exchange Commission announced two new rule proposals under the Investment Company Act that would permit exchange traded funds (ETFs) to operate without their issuer’s need to seek individual exemptive orders from the Commission. The finalization of these rules will also alleviate the pressure on Commission staff, who are currently required to review each exemptive order application from all issuers seeking to create an ETF Trust, and to reduce the months-long wait for review and comment that hinders the prospective issuers’ launches.

Proposed Rule 6c-11 would codify most of the standard exemptions granted with reference to index-based ETFs and certain provisions of the exemptions recently granted for fully transparent actively-managed ETFs. Proposed Rule 12d1-4 would increase the amounts of ETF investments investment companies may make under the Investment Company Act. In addition, Form N-1A would be amended to include information specific to ETF sponsors and issuers. The proposed rules and form amendments are expected to be published soon for public comment.

http://sec.gov/news/press/2008/2008-30.htm