Regulating Fixed Income ETPs: Entering the Forest

One of the subjects the Securities and Exchange Commission has focused on recently is the proliferation of exchange-traded products (ETPs) across all markets and instruments, a proliferation in both number and type that prompted the regulator to issue proposed Rule 6c-11 in June of this year. As a result of this proposal, the SEC’s Fixed Income Market Structure Advisory Committee (FIMSAC) voted at its Oct. 29, 2018, meeting to make two recommendations to the full commission, one in the form of a comment letter and one in an additional document. This report examines the requirements of Rule 6c-11 and the FIMSAC’s recommendations, focusing on:

• The definitions of the various types of ETPs in both Rule 6c-11 and the FIMSAC recommendations,
• The ETP market structure, and
• What kind of educational and data efforts are needed going forward.