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REGULATION/LEGISLATION

SEC gives green light to Bats’ proposed changes for ETF rules

The SEC on Tuesday approved ETF rule changes proposed by Bats’ BZX Exchange to create additional listing standards and procedures for delisting of non-compliant companies.

The Securities and Exchange Commission’s approval, granted on an accelerated basis, also calls for public comment on the proposed changes, 21 days after it is published in the Federal Register.

A notice on the SEC website acknowledges receiving comment letters from asset managers including BlackRock (BLK), Invesco (IVZ) and State Street Global Advisors, “that express concerns regarding the proposal,” including how third-party indexes would comply with the proposed rules and how the exchange would enforce them.

“Commenters assert that it would be unrealistic to anticipate that an ETF could ensure that an unaffiliated index complies with the initial listing standards on an ongoing basis,” the SEC noted.

“Even if a third-party index provider was amenable to changes to an underlying index that would allow an exchange-traded fund to regain compliance with the continued listing standards, it is unlikely that the ETF would be able to formulate a compliance plan within 45 calendar days of the exchange staff’s notification,” commenters told the SEC.

The SEC approval is on the agency’s website.