Nasdaq Pushes for Easier Multi-Class ETF Trading Rules
Published Date: 5/27/2025
Notice
Summary
Nasdaq wants to make it easier to list and trade Multi-Class ETFs—special funds with different types of shares—by adopting a new rule. This change affects investors and fund managers by allowing more flexible ETF options starting soon, with no extra costs expected. The SEC is now asking for public feedback before giving the green light.
Analyzed Economic Effects
4 provisions identified: 2 benefits, 1 costs, 1 mixed.
Generic Listing of Multi‑Class ETFs
Nasdaq proposes Rule 5703 to let Multi‑Class ETF series that comply with Rule 6c-11 and have applicable exemptive relief be listed and traded generically on Nasdaq. Once the SEC grants the exemptive relief for a fund, that fund’s ETF class could be listed and traded without a separate Section 19(b) approval or notice of effectiveness.
Lower Listing Burdens for Fund Issuers
Nasdaq says listing Multi‑Class ETF Shares under proposed Rule 5703 avoids the older quantitative portfolio and ongoing compliance requirements in Rules 5705(b) and 5735. That change is intended to reduce the additional listing and compliance burdens funds would face if they were listed under the older rules.
Ongoing Compliance, Reporting, and Halt Powers
Issuers of Multi‑Class ETF Shares must keep meeting Rule 6c-11 and any exemptive relief and must notify Nasdaq promptly if they fail to comply. Nasdaq will maintain surveillance, can halt trading under Nasdaq Rules 4120/4121, and may commence delisting if continuance criteria are not met.
Delisting Trigger: Fewer Than 50 Holders
A series of Multi‑Class ETF Shares may be subject to delisting proceedings if, after the first 12 months of trading, there are fewer than 50 beneficial holders for 30 or more consecutive trading days. Nasdaq may also suspend trading or delist a series if the issuer is no longer in compliance with Rule 6c-11 or applicable exemptive relief.
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