The Securities and Exchange Commission voted Sept. 26 to adopt a final rule modernizing requirements applicable to exchange-traded funds (ETFs), simultaneously reducing the amount of red tape involved in bringing these funds to market and also providing greater transparency for investors.
Although ETFs were first developed almost three decades ago, these hybrid investment products were not originally allowed under securities laws, the SEC explained in a press release announcing its action. To get around that barrier, the Commission over the years issued upward of 300 exemptive orders that allowed ETFs to operate pursuant to the Investment Company Act of 1940. Now, roughly 2,000 ETFs exist with more than $3.3 trillion in total net assets.
