I.          Executive Summary

Overview

The Securities and Exchange Commission (the “Commission”) proposed Rule 6c-11 (the “Proposed Rule”) under the Investment Company Act of 1940, as amended (the “1940 Act”),¹ if adopted, would permit exchange-traded funds (“ETFs”), subject to certain conditions, to operate in reliance on a rule rather than individual exemptive orders.  The Proposed Rule, issued on June 28, 2018, is a significant, albeit anticipated,² development for the ETF industry.  The Proposed Rule, along with proposed form and disclosure amendments, is intended to modernize the regulatory framework for most ETFs.  According to the Proposing Release, the Proposed Rule and amendments are “designed to create a consistent, transparent, and efficient regulatory framework for ETFs and to facilitate greater competition and innovation among ETFs.”  As part of this effort, the Commission is proposing to rescind the individual exemptive orders issued to all ETFs other than certain limited types of ETFs that would not be permitted to rely on the Proposed Rule, with a one-year transition period.  To date, the Commission has granted more than 300 such orders, many with inconsistent terms and conditions.

The Commission seeks comment on all aspects of the Proposed Rule and the form and disclosure amendments.

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1 See Exchange-Traded Funds, SEC Release No. IC-33140 (Jun. 28, 2018) (the “Proposing Release”).  The Proposed Rule was adopted by a unanimous vote of the Commission.

2 In her keynote address at the Investment Company Institute’s 2018 Mutual Funds and Investment Management Conference on March 19, 2018, the Director of the Commission’s Division of Investment Management, Dalia Blass, indicated that a uniform ETF rule was a high priority for the Division (available at: https://www.sec.gov/news/speech/speech-blass-2018-03-19).