SEC Debates Multi-Class ETFs: Trading's New Wild Card?
Published Date: 2/19/2025
Notice
Summary
The Cboe BZX Exchange wants to change its rules to allow a new type of ETF called Multi-Class ETF Shares to be listed and traded more easily. This affects investors and fund managers who deal with ETFs, potentially opening up fresh opportunities in the market. The SEC is now reviewing this change and will decide by February 23, 2025, so keep an eye out for updates that could impact trading options and strategies.
Analyzed Economic Effects
3 provisions identified: 1 benefits, 2 costs, 0 mixed.
Generic Listing of Multi‑Class ETFs Allowed
If the SEC grants exemptive relief, the Cboe BZX Exchange’s proposed rule would allow Multi‑Class ETF Shares to be generically listed and traded on the Exchange immediately upon the Commission’s order. This could expand the types of ETF share classes available to investors and fund managers who deal with ETFs.
Trading Suspension and Delisting Risk
The Exchange proposes that if it becomes aware an issuer is no longer eligible to operate in reliance on Rule 6c-11 or any exemptive relief for Multi‑Class ETF Shares, it will consider suspending trading and commence delisting under BZX Rule 14.12. If you hold such ETF shares, those shares could be suspended or delisted under those conditions.
SEC Review, Timeline, and Comment Deadlines
The SEC has instituted proceedings and will decide whether to approve or disapprove the proposed BZX rule change by February 23, 2025. Interested persons may submit written comments by March 12, 2025, and rebuttals by March 26, 2025.
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