SEC speeds up listing process for some ETFs

Many actively managed funds will now be able to list new ETF products without a separate filing with the SEC, effective immediately, the New York Stock Exchange said in a statement.

Bats Global Markets Inc, which emerged as one of the fastest-growing trading venues for ETFs last year, and the NYSE received the approvals on Friday. (http://bit.ly/2ajnVGj)

NYSE is owned by Intercontinental Exchange Inc.

"This is a big deal for the industry," said Jeremy Senderowicz, a securities lawyer and partner at Dechert LLP in New York, adding that the standards will reduce the uncertainty that prevented companies from offering new 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)