New SEC-Approved ETF Listing Rule Clears Hurdles for Cboe Issuers

We say this a lot, but that’s only because it’s true: everything we do is guided by our mission to improve the markets and provide a better experience. That is why we were so excited at the start of April when the Securities and Exchange Commission approved Cboe’s request to create a new listing rule that aligns Cboe’s ETF listing standards with the SEC’s ETF Rule (6c-11). This approval was a huge step forward in providing a more efficient and streamlined process for our ETF issuers. I’m excited to share this news and how it will benefit issuers at Cboe.

You may recall, Rule 6c-11 became operative in December 2019 to modernize the regulatory framework for ETFs and set an industry standard. Cboe welcomed this regulation, which tightened transparency and disclosure requirements and eliminated the costly, time-consuming exemptive relief requirement.

Under the new Cboe ETF Listing Rule, ETFs that meet the requirements of Rule 6c-11 may be listed without meeting the additional quantitative portfolio holdings requirements that have historically applied to ETFs. This approach streamlines product development and legal efforts for issuers by aligning the regulatory requirements between the SEC and the exchange and provides issuers with a greater degree of certainty from a time to market and regulatory perspective.

In addition to the new ETF Listing Rule, the SEC also allowed Cboe to remove the exchange requirement for issuers to disseminate an Intraday Indicative Value (IIV) for ETFs that disclose their holdings on a daily basis.

As you may know, the IIV is a calculation of the most recent value of the fund based on market prices of the underlying securities. Cboe is the first exchange to remove the IIV requirement, eliminating extra requirements and costs for issuers and leading the way in revolutionizing the ETF space.

These SEC approvals will accelerate the listing and approval process for ETFs primarily listing on Cboe. Not to mention, the changes will reduce costs and associated burdens on issuers efficiently developing and operating their products.

These changes are expected to drastically reduce Cboe’s need to file for product specific rule changes (SEC Form 19b-4) on behalf of issuers, further accelerating the listing process. 19b-4 rule changes are another potential hurdle and cost for issuers when bringing products to market. Cboe’s new rules clear those hurdles, better positioning issuers to innovate and effectively manage portfolios. We look forward to delivering a better, more streamlined service to our customers as Cboe continues defining markets in the ETF space and across the industry.

Learn more about how to become #CboeListed here.