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Monday, July 25, 2016

Launching Active ETFs Is About to Get Simpler, and Faster

News summary by MFWire's editors

Fundsters with designs on launching active ETFs, BATS and the NYSE have some good SEC news for you.

The rival exchanges are trumpeting the SEC's move to approve the creation of a "simplified" (as NYSE calls it) or "generic" (BATS' word choice) listing process or standards for new, actively-managed exchange-traded funds. As BATS puts it, "Thus far, active ETFs of any sort have been approved on a case-by-case basis only, which is often both costly and lengthy." Or, as the NYSE puts it, exchanges have been required "to file with the SEC a detailed description of a new derivative product, including options, warrants, hybrid securities and ETFs, on Form 10b-4 and for the SEC to approve the filing, before the exchange can list such a new derivative product," unless that new product "meets SEC approved 'generic' listing standards."

Barron's picked up on the news, while ETF.com and the Wall Street Journal saw it coming earlier on Friday.

No longer, the exchanges say, because now the SEC is going to allow such generic listing standards for active ETFs (not to be confused with the actively-managed, but less-frequently transparent NextShares created by Eaton Vance).

"We are pleased that our efforts to rationalize the listings process for actively managed funds will provide issuers with greater certainty on timing and efficiency when launching new products," states Doug Yones, the NYSE's head of exchange traded products.

"This is a pivotal moment for the ETF industry as the introduction of these standards will help issuers of all sizes bring innovative funds to the market in weeks instead of months, and with more certainty of approval," states Chris Concannon, CEO of BATs. Today's approval is the result of nearly two years of intensive efforts and underscores our commitment to ensuring the ETF market is as efficient and innovative as possible."

Indeed, the change has been a long time in the making. Meanwhile, as ETF.com notes, active ETFs still face an "uphill battle" in gathering assets; they're up to about one percent of the $2 trillion in U.S.-listed ETFs. Yet the pub notes that fundsters are still launching lots of active ETFs: 18 active ETFs have launched so far in 2016, which is about 15 percent of all ETF launches so far. 

Edited by: Neil Anderson, Managing Editor


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