By Suzanne McGee
(Reuters) -Cboe World Markets requested the SEC to approve a rule change that might permit issuers so as to add an exchange-traded fund share class to current mutual funds, the trade mentioned on Thursday.
If authorised, asset managers might supply publicity to current mutual fund portfolios by an ETF, just like the best way they make mutual fund share lessons with completely different charges and different options obtainable now.
“Including an exchange-traded share class provides traders extra choices,” mentioned Rob Marrocco, world head of ETP listings at Cboe.
SEC approval would permit issuers to extra simply add ETF merchandise that share the document of an current mutual fund quite than launching new funds, analysts mentioned.
“Each the variety of ETFs and ETF property might soar” if the SEC approves Cboe’s request, mentioned Todd Sohn, ETF analyst at Strategas LLC.
Vanguard Group’s patent on the share class idea expired in Might 2023. Since then, eight different asset managers have sought SEC approval to copy the mannequin, together with Dimensional Fund Advisors, Morgan Stanley and Constancy.
Others, together with T. Rowe Value and JP Morgan, have expressed curiosity on this method.
The Cboe submitting “provides issuers an avenue to drive the SEC to reply to and interact with” their functions, mentioned Bryan Armour, ETF strategist at Morningstar. The SEC should approve or reject Cboe’s software inside 240 days.
There isn’t any assure the SEC will approve the appliance. Morningstar’s Armour famous the SEC already made one high-profile resolution by approving spot bitcoin ETFs and put the percentages of the Cboe successful approval this yr at “a bit lower than 50%.”
However the trade’s willingness to hitch the battle alongside asset managers could increase longer-term odds of successful the SEC’s blessing, Armour added.
“Finally, that is the path by which issues are heading, and clearly Cboe is pushing to be within the lead,” he mentioned.