The new head of the SEC, Jay Clayton, is working to push forward new rules governing the creation of ETFs. Currently, the system is based on ad hoc reviews with little guidance given to fund companies about how they should prepare. Benjamin Bain and Robert Schmidt report at Bloomberg:
U.S. Securities and Exchange Commission Chairman Jay Clayton is working to streamline the agency’s ad hoc approach to approving new exchange-traded funds, putting a spotlight on an issue that has vexed the regulator for a decade.
Clayton, who joined the SEC in May, has asked staff to build upon a proposal that was nearly adopted before the 2008 financial crisis doomed its chances, three people familiar with the matter said. A new rule would likely be welcomed by much of the mutual fund industry, which often complains about the costs and how long it takes to get the agency’s sign-off.
“It’s about time,” said Paul Atkins, a former SEC commissioner who consults for some asset management firms as head of Patomak Global Partners. “People need to know what the rules are.”
The SEC has never developed comprehensive policies governing ETFs, which are similar to mutual funds but trade like stocks, even as more small investors have poured money into the products. As the funds have grown into a $3 trillion market in the U.S., companies have designed increasingly complicated products to offer more variety and compete for customers seeking higher returns.
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Jeremy Jones, CFA
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