SEC Releases Novel ETF Request for Comment

In early July, the Securities and Exchange Commission (SEC) issued a Request for Comment (Request) on Novel ETFs which seeks public comment on fundamental questions concerning how Novel ETFs should be structured. The Request follows a May 20 statement from SEC Chair Paul Atkins that directed Commission staff to gather information from the public on how to respond to these new product launches.

The Request highlights concerns that the products in the queue for launch may not be investment companies, whether to establish a more rigorous process for registration statement review, and whether Rule 6c-11 of the Investment Company Act of 1940 should be amended to address these novel strategies. The Request sets forth 27 questions designed to gather information from industry participants. According to a Commission press release, “The request focuses on ways to facilitate innovation in the ETF space while protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.”

While the Request is not a formal rule proposal from the Commission, it will likely be used by the Commission staff to inform future rulemaking or guidance. The Request was published in the Federal Register on July 2, with comments due by August 31.  

Click here to read the SEC’s Novel ETF Request for Comment.

Click here to read the SEC’s press release on the Request for Comment.

Click here to read a client alert from K&L Gates.