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SEC adopts new rule to modernize regulation of ETFs: News Scan

SEC-02072018

Our weekly roundup of industry highlights

SEC adopts new rule to modernize regulation of ETFs
The SEC announced it has voted to adopt a new rule and form amendments designed to modernize the regulation of ETFs by establishing a clear framework for the vast majority of the funds operating today.

The adoption, the regulator says, will facilitate greater competition and innovation in the ETF marketplace, leading to more choice for investors. The rule also aims to allow ETFs to come to market more quickly without the time or expense of applying for individual exemptive relief.

"As the ETF industry continues to grow in size and importance, particularly to Main Street investors, it is important to have a consistent, transparent and efficient regulatory framework that eliminates regulatory hurdles while maintaining appropriate investor protections," says SEC Chairman Jay Clayton.

American Century signs licensing agreement with the NYSE
American Century Investments has entered into a licensing agreement with the NYSE in support of the potential launch of actively managed, semi-transparent ETFs.

Subject to regulatory approval, the NYSE Actively Managed Solution will allow American Century to deliver its actively managed investment strategies in an ETF vehicle, without the daily holdings disclosure requirement of fully transparent ETFs.

"We believe semi-transparent active ETFs represent the next frontier in ETF investing," says Edward Rosenberg, senior vice president and head of ETFs for American Century. "For over 60 years, American Century Investments has built a strong reputation for delivering active management solutions. Thanks to this latest innovation in ETFs, we hope to meet the evolving needs of a broader array of clients."

Bitcoin ETF proposal withdrawn by CBOE
CBOE Global Markets' BZX exchange withdrew its proposal to the SEC to list and trade shares of a bitcoin investment vehicle, according to Bloomberg News.

The proposed rule change, which would have allowed BZX to list and trade SolidX Bitcoin Shares issued by the VanEck SolidX Bitcoin Trust, was withdrawn by CBOE on Sept. 13, according to an SEC filing.

"We are committed to supporting bitcoin and bitcoin-focused financial innovation. Bringing to market a physical, liquid and insured ETF remains a top priority. We continue to work closely with regulators and market participants to get one step closer every day," Gabor Gurbacs, director of digital asset strategy at VanEck Associates, said in a tweet.

PRODUCTS
Avantis investors launches suite of low-cost ETFs
Avantis Investors, a subsidiary of American Century Investments, launched its five inaugural low-cost, broadly diversified ETFs: the Avantis International Small Cap Value ETF (AVDV), Avantis International Equity ETF (AVDE), Avantis Emerging Markets Equity ETF (AVEM), Avantis U.S. Equity ETF (AVUS) and Avantis U.S. Small Cap Value ETF (AVUV), according to the firm.

"While we know investors have a lot of choices available to them in the marketplace, we believe there is still considerable demand for broadly diversified solutions that seek low rebalancing costs, capital gains and fees," says Avantis Investors Chief Investment Officer Eduardo Repetto.

RBC introduces a new global bond fund
RBC Global Asset Management announced the launch of the RBC BlueBay Global Bond Fund, a globally diversified fixed-income product designed as a core portfolio holding for U.S. investors.

The fund is actively managed and fully integrates ESG principles, the firm said.

"The RBC BlueBay Global Bond Fund leverages the depth and expertise of 27 investment professionals on BlueBay's Investment Grade team, and brings U.S. clients a truly global approach to help meet their fixed-income needs," says Jeff Masom, head of global institutional distribution at RBC GAM.

State Street to battle BlackRock, DWS with new sustainable funds
State Street is almost doubling its line-up of socially-responsible ETFs as it looks to compete with the likes of BlackRock and Deutsche Bank's DWS in the burgeoning market for values-oriented investing, according to Bloomberg News.

The Boston-based asset manager plans to create five ETFs focusing on companies that implement ESG characteristics, according to regulatory filings. The funds will track indexes provided by Bloomberg.

"Coming in relatively late to the party could be a challenge," says Todd Rosenbluth, director of ETF research at CFRA Research. "The adoption of ESG assets in the ETF wrapper is a generational shift."

"It's still the early innings but there are firms that have a head start," he adds.

SoFi introduces crypto trading
SoFi has added crypto trading to its fast-growing SoFi Invest platform as a response to demand from its over 800,000 members, according to the firm. SoFi Invest is now the first platform to offer automated and active investing with stocks, ETFs and crypto through a single app.

Clients can buy and sell several cryptocurrencies with straightforward, competitive commissions and no account minimums, as well as track the price movements of the world's most widely traded digital assets, with more cryptocurrencies to be added in the coming months.

"Feedback from our members has made it clear that a significant percentage are not only interested in learning more about cryptocurrencies, but are also already buying and selling crypto," SoFi CEO Anthony Noto says.

Invesco expands BulletShares suite
Invesco announced the launch of a new suite of defined maturity BulletShares ETFs with exposure to municipal debt issued by state and local governments.

BulletShares Municipal Bond ETFs seek to offer investors a passive means to access the tax-free yield of quality municipals bonds through a liquid product with a fixed date of maturity. The platform, according to the firm, offers the potential for monthly income and a cash distribution upon termination.

“The combination of low rates, curbs on state and local tax deductions, and consistent economic expansion have been a nice tailwind,” an analyst says.
October 9

With the inclusion of the newest BulletShares ETFs, Invesco now offers over 30 defined-maturity ETFs with defined years of maturity ranging from 2019 to 2029.

ARRIVALS
Virtus names EVP and chief legal officer
Virtus Investment Partners announced that Wendy Hills of Waddell & Reed has joined the company as executive vice president, chief legal officer, general counsel and corporate secretary.

Hills, who has two decades of business and legal experience in the asset management industry, most recently served as executive vice president, chief legal officer, general counsel and corporate secretary at Waddell & Reed Financial, Virtus said.

Now, at Virtus, Hill will be the company's chief legal officer, responsible for developing and guiding the strategic direction of the legal, regulatory and compliance functions. She will also will act as corporate secretary, providing counsel to the board of directors on corporate governance.

Mark White was appointed managing director and senior business development executive of the SEI Wealth Platform.

SEI hires managing director, senior business development exec
SEI announced the appointment of Mark White as the managing director and senior business development executive of the SEI Wealth Platform.

In this role, White is responsible for driving growth through new business development initiatives focused specifically on building strategic partnerships with traditional banking firms.

With more than 30 years of experience, including 25 years in business development and executive leadership roles, White most recently served as a senior sales executive at FIS.

Prior to FIS, White held senior roles at Sungard and Kaplan Financial, where he managed a compliance solution product line, held sales responsibilities and oversaw onshore and offshore organizational activities.

Sentinel trust appoints CIO
Sentinel Trust Company, a $4.3 billion multifamily office in Houston, announced the hiring of Todd Burchett, managing director and chief investment officer.

As CIO, Todd Burchett, veteran investor and long-time advisor to the ultrawealthy, is responsible for all investment strategy and process across Sentinel Trust's national footprint.

Burchett brings nearly 20 years of experience creating institutional-quality solutions for this market segment.

Burchett joins Sentinel Trust from Athena Capital Advisors, a $6 billion multi-family office that largely serves the families of professional investors. Burchett succeeds Bruce L. Swanson, who will remain a partner of the firm.

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