SEC speeds up listing process for some ETFs

“It doesn’t expand the universe of products which can be offered, but it introduces reliability and speed into the process of getting to market.”

ETFs issue shares in large blocks called “creation units” that investors then split up and sell in the secondary market.

The funds generally redeem those units by giving investors the securities in the portfolios instead of cash.

When a firm wants to launch a new kind of exchange-traded fund, it has to apply for “exemptive relief” from the SEC. The agency typically takes months to approve new ETF applications.

The SEC has heightened scrutiny of ETFs after an irregular volatility seen on Aug. 24, when some ETFs and stocks sank 30 percent or more from the previous day’s closing level. Trading in 327 ETFs was halted.

(Reporting by Arunima Banerjee in Bengaluru and Trevor Hunnicutt in New York, Editing by Saumyadeb Chakrabarty)