The $4 trillion ETF market scores a huge win, giving it the green light to grow faster than ever

  • The US Securities and Exchange Commission announced Thursday a faster processing track for exchange-traded funds looking to hit markets.
  • The move gives the $4 trillion ETF market access to faster growth by removing the need for common funds to receive special approval from the agency.
  • Complex ETF products relying on SEC rule exemptions will need to comply with new conditions “designed to protect investors,” the agency said in a statement.
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The US Securities and Exchange Commission announced Thursday a faster processing track for exchange-traded funds, giving the $4 trillion ETF market access to faster growth than before.

In an effort to “modernize regulation of exchange-traded funds,” the agency removed the need for ETF providers to seek unique approval before selling their asset to investors, according to the commission’s statement.

“As the ETF industry continues to grow in size and importance, particularly to Main Street investors, it is important to have a consistent, transparent, and efficient regulatory framework that eliminates regulatory hurdles while maintaining appropriate investor protections,” SEC Chairman Jay Clayton said.

The new rules primarily effect common ETFs based on assets like S&P 500 companies and bonds. Complex ETF products like leveraged funds will still require individual approval through the current SEC process.

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The updated process will go into effect 60 days after publication in the Federal Register.

The SEC also issued a one-year transition period for ETFs previously deemed exempt from the commission’s rules. This small set of ETFs will have their “exempt” status rescinded and be forced to adhere to the agency’s new regulations.

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