The Securities and Exchange Commission is proposing to simplify and modernize the regulatory framework governing exchange-traded funds and enhance information to investors about the costs of purchasing ETF shares. If adopted, the proposal would, among other things:

- Allow most ETFs to operate without first obtaining exemptive relief, by relying on a proposed new rule;

- Provide greater flexibility with respect to aspects of ETF operations than exists under exemptive relief issued in recent years, including the use of “custom baskets” for creation and redemption transactions; and

- Require additional disclosures regarding ETFs’ trading costs, including certain bid-ask spread information.

The SEC’s proposal also would rescind existing exemptive relief for those ETFs that are eligible to rely on the proposed rule.