ETF Rule on SEC Front Burner, Or So Wall Street Hopes

(Bloomberg) -- The U.S. Securities and Exchange Commission appears on track to remove hurdles for exchange-traded funds getting to market. But the trillion-dollar industry is still asking the billion-dollar question.


If all goes as planned, the answer may very well come sooner than expected, according to attorneys on a panel about regulation at a conference focused on smart-beta ETFs in New York City Thursday.

The SEC “has indicated it’s on their short-term agenda,” said Jane Heinrichs, associate general counsel at the Investment Company Institute. “By the end of September we’re expecting a rule proposal.”

This would give the industry time to send in comments before the SEC votes on the rule. That’s important “because they usually don’t get it right the first time,” Heinrichs said.

According to Stacy Fuller, partner at K&L Gates, one thing the industry hopes to see in the new rule is reduced costs for getting funds approved, a process known as “exemptive relief.”

“For new entrants it should bring costs down,” Fuller said. “Right now you either have to pay me to get your own exemptive order, or you have to pay an umbrella trust to use their exemptive order.”

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