In her remarks at the ETFs Global Markets Roundtable on May 21, 2019, SEC Commissioner Hester Peirce commented on the role ETFs play in financial experimentation and innovation, and the SEC’s role in protecting investors while not unnecessarily slowing ETF innovation. She discussed the SEC’s proposed ETF rule, which would standardize the conditions for ETF exemptive relief, thereby providing a level playing field for ETF sponsors and making it easier for new ETF sponsors to come to market.

Ms. Peirce also discussed the SEC’s cautious approach in issuing exemptive orders for actively managed ETFs and approving new types of ETFs. She noted the growth of actively managed ETFs and the SEC’s recently issued exemptive order for a non-fully transparent actively managed ETF, and expressed a desire that the SEC would act expeditiously on other outstanding requests for similar exemptive relief. She stated her views that the SEC’s concerns about investor comprehension of leveraged and inverse ETFs could be addressed by disclosure and that the SEC’s refusal to permit additional ETF sponsors to offer such products creates an oligopoly for the two ETF sponsors that previously received exemptive relief to the detriment of investors.

Ms. Peirce further discussed the continued interest in an exchange-traded cryptocurrency product. She noted that the SEC had disapproved certain product proposals in light of several stated concerns, but stated that that approving such a product could lead to increased participation by institutional investors in cryptocurrency markets that could lead to better defenses against theft, improved custody solutions and lower risk of market manipulation.

The transcript of Ms. Peirce’s remarks is available at:

https://www.sec.gov/news/speech/speech-peirce-052119

Investment Services Update - June

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