SEC puts brakes on certain ETF rollouts (IGNITES)

The SEC’s Division of Investment Management seems to be changing course on its traditional approach to ETF launches. The staff has issued letters to three ETFs, each with a novel structure, following their rollout. It’s an usual practice for the Division to request further information after the ETF has been launched. Amy Lynch, FrontLine’s Founder and President, believes it reflects the current SEC’s radically different approach to product innovation. By asking post-launch questions about the ETFs, the SEC is seeking to maintain order without stopping an ETF from launching. This SEC has indicated it wants to make capital markets more accessible, which means allowing new fund structures, explains Ms. Lynch. She adds that the letters may also be ways for the SEC to collect more information from the ETF sponsors to help with future rulemaking or to modify existing rules. See IGNITES (subscription required), “For Novel ETFs, SEC Scrutiny Can Come Post-Rollout”