New SEC Exchange-Traded Fund Rule: ETF Formation and Operation

New Requirements Regarding Transparency, Valuation, Reporting, Custom Baskets, Listing

This program has been cancelled

A live 90-minute premium CLE webinar with interactive Q&A

Thursday, January 30, 2020 (in 4 days)

1:00pm-2:30pm EST, 10:00am-11:30am PST

This CLE webinar will examine new Rule 6c-11 regarding the registration and operation of exchange-traded funds (ETFs). The panel will discuss what has changed with regard to exemptive orders, what constitutes an "Eligible ETF," requirements with regard to disclosure, reporting, and transparency for ETFs going forward, and what previously exempted ETFs must do now to comply.


On Sept. 25, 2019, the SEC adopted a long-awaited rule permitting the operation of ETFs without the need for an SEC exemptive order. Rule 6c-11 (the Rule) under the Investment Company Act of 1940 (1940 Act) is designed to codify the regulation of ETFs, whose operation for more than two decades has been shaped by the terms of individual exemptive orders that in many cases differ from ETF to ETF. All ETFs covered by the Rule (including those with previous exemptive orders) must comply with the Rule within one year of the effective date.

Most every ETF organized as an open-end fund is an "Eligible ETF" under the Rule. The Rule does not apply to leveraged or inverse ETFs, semi-transparent ETFs, ETFs structured as unit investment trusts (UITs), and ETFs organized as a separate class of a fund issuing multiple classes of shares. These will continue to require individual exemptive orders.

ETFs must comply with various conditions to rely on the Rule, including daily posting of portfolio holdings information in a standardized format on the ETF's website before commencement of trading; adopting written policies and procedures governing the construction of baskets and the process of acceptance of baskets; disclosing premium, discount, and bid-ask spread information on its website; and maintaining additional records of all written agreements with authorized participants and regarding baskets exchanged with authorized participants.

Listen as our authoritative panel analyzes the new ETF regulatory regime as codified under the Rule, and discusses what existing and proposed ETFs must do now to comply with the Rule.



  1. Existing ETF regulatory framework
    1. Investment Company Act of 1940 ("1940 Act")
    2. 1940 Act Exemptive orders
    3. Exemptive relief under the Securities Exchange Act of 1934 ("1934 Act")
  2. New ETF regulations: Rule 6c-11
    1. Defines exchange-traded fund
    2. Scope: most open-end funds are "Eligible ETFs"
    3. Daily reporting of holdings and pricing
    4. Policies and procedures governing the construction of investment baskets (including "custom baskets")
    5. Transparency about premium, discount, and bid-ask spread
    6. Recordkeeping requirements
  3. Deadline for compliance by existing funds with exemptive orders


The panel will review these and other relevant matters:

  • What is the significance of Rule 6c-11 for new and existing ETFs? What deficiencies in the existing regulatory regime is it intended to fix?
  • Why are leveraged, inverse, and semi-transparent ETFs excluded from the Rule?
  • What are the operational requirements for ETFs under the Rule?
  • When must existing ETFs comply with the Rule?
  • Adding ETF series to existing trusts


Conner, W. Thomas
W. Thomas Conner

Vedder Price

Mr. Conner has represented financial services companies, including mutual funds, exchange traded funds (ETFs),...  |  Read More

McCabe, Brian
Brian D McCabe

Ropes & Gray

Mr. McCabe is a partner in the asset management group. He focuses his practice on representing financial services...  |  Read More

McGuire, W. John
W. John McGuire

Morgan Lewis & Bockius

Mr. McGuire counsels clients on investment company and investment adviser regulatory issues and related issues...  |  Read More