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According to the agency’s acting chairman, roughly 50 applications from companies seeking to provide dual-share class mutual funds and ETFs are transparent to in-queue queues, and are at the top of the Securities and Exchange Commission’s to-do list.
“I have instructed the committee staff to prioritize careful review of many applications submitted for this relief and look forward to considering their recommendations,” Mark Ueda told attendees on March 17 at the Investment Management Conference of the Institute of Investment Companies in San Diego.
Although he did not provide a specific timeline for application adjudication, Uyeda suggested that they would consider exempt relief while they were quickly tracked for reviews and acting as representative chair of the SEC.
Granting such case-by-case authority will create “labs where new ideas can be reviewed from market participants,” Uyeda said.
This article was previously published by Ignites, a title owned by the FT Group.
“This gives us the opportunity to consider the benefits of the new product and the potential risks to investors and the market.”
“It’s been more than two years since the latest exemption application for ETF stock class relief was filed,” he said, adding that ETFs currently account for around 30% of the total net worth operated by investment companies.
Ueda was appointed acting chairman by US President Donald Trump in February. Weda is widely expected to be handed over to Paul Atkins, the current pick in the Trump Post, which was nominated in January. Atkins’ confirmation hearing has not yet been scheduled by Congress.
Currently, there are 51 pending applications seeking some form of stock class relief to expand its options for investors, according to a report from law firm Stradley Ronon, published March 17th.
Over the past few years, requests have been piled up as fund managers jumped at the opportunity to provide client strategies on a variety of vehicles. In some cases, managers are asking you to launch the ETF version of your existing active mutual fund. Otherwise, they are asking to add a long-only version of the existing ETF.
Vanguard had patents on the index-based funding process until it expired in 2023.
BNY and Doubleline have joined Queue on Thursday and become the latest companies to submit applications.
“It’s a very on-point for this administration – a harbinger of innovation,” said Alex Alberstadt, an attorney for the investment management group at Seward & Kissel.
After the speech, ICI president Eric Pan, who briefly interviewed uyeda during the meeting stage, described the share class petition as “one of some great ideas ripe for quick action.”
Pan congratulated Uyeda on serving as SEC chair in January. This removed the agency to act based on dual-share class applications.
Uyeda’s comments were part of a longer speech at the ICI conference.
Uyeda ridden the agency’s approach to rulemaking under former chairman Gary Gensler, saying the agency does not offer a “meaningful” opportunity to comment on the SEC proposal, particularly regarding liquidity requirements for open-ended funds and changes to swing pricing guidelines.
“One of my purposes is to set up a blueprint to restore the Commission’s rulemaking process to the “gold standard” of regulatory bodies,” Uyeda said.
“The committee’s blueprint needs to prioritize effective and cost-effective regulations that respect the limitations of our statutory authorities,” he said.
He also characterized the Gensler SEC as generally opposed to innovation in the securities industry, calling the institution “inflexible.”
*Ignites is a news service published by FT specialists for professionals working in the asset management industry. Trials and subscriptions are available at IGNITES.com.
