Answering ‘Is That an ETF?’ May Get Easier Under Plan Put to SEC
- Leveraged, inverse products wouldn’t be exchange-traded funds
- New rule would aim for ‘clearer labeling’ for retail investors
The Securities and Exchange Commission (SEC) headquarters building in Washington, D.C.
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Investors could find it easier to differentiate between exchange-traded funds and other investments under a new proposal put to the U.S. Securities and Exchange Commission.
Under the plan, issuers would be banned from calling their products ‘‘ETFs,’’ unless they meet certain criteria set out in a comment letter from the regulator’s Fixed Income Market Structure Advisory Committee. Leveraged products and those that promise inverse exposure by mirroring an index would not be eligible, the working group on ETFs and bond funds said, in recommendations that were unanimously approved by the broader committee.