- The US Securities and Exchange Commission has approved generic listing standards for ETPs (Exchange Traded Products) related to spot commodities, including digital assets.
- The new rule will preclude commodity-based Trust Shares from the rigors of proposing a rule change to the SEC before listing their products on exchanges.
- The generic listing standards represent another notch of efforts by the Commission towards enhancing regulatory clarity and building trust in the regulatory system.
The US Securities and Exchange Commission (SEC) has standardized the listing framework for ETPs (Exchange Traded Products) linked to spot markets, including digital assets. In view of this change, exchanges can now expressly “list and trade Commodity-Based Trust Shares” that meet the conditions of the generic standard without needing to file a proposed rule change with the SEC per usual.
Generic Standard Enhances Listing Certainty For ETPs
Besides streamlining the listing process for spot commodity ETPs, the generic standard also bolsters the SEC’s efforts towards promoting transparency in its approval of market entrants. It also strengthens the agency’s post-Biden era attempts to restore faith in its policy direction and general regulatory approach.
“By approving these generic listing standards, we are ensuring that our capital markets remain the best place in the world to engage in the cutting-edge innovation of digital assets, “ noted SEC Chair Paul Atkins.
“This approval helps to maximize investor choice and foster innovation by streamlining the listing process and reducing barriers to access digital asset products within America’s trusted capital markets.”
In addition to meeting the generic listing, an exchange is required to provide specific pieces of information on its websites concerning the ETP within five working days of trading the ETP. Issuers, investors, and other market players stand to benefit from this simplified listing framework, since it reduces the time and cost of launching new ETPs in the market.
As SEC Division of Trading and Markets Director Jamie Selway pointed out, the approval of the comprehensive listing standards “provides much-needed regulatory clarity and certainty to the investment community through a rational, rules-based approach to bring products to market while ensuring investor protections.”
Exchanges to File With SEC When ETPs Fail to Meet New Standards
Under the new generic rules, a potential ETP holding qualifies if the commodity trades on a market that belongs to an Intermarket Surveillance Group or backs a futures contract trading for no less than six months on a designated contract market regulated by the CFTC (Commodity Futures Trading Commission).
However, an exchange must still submit a rule filing with the SEC if the ETP it wants to list and trade does not comply with the generic listing provisions. Exchanges are expected to broaden their eligibility criteria for spot commodity ETPs in the future to fast-track the market entrance of other products.
The SEC has also authorized the listing and trading of the Grayscale Digital Large Cap Fund, which provides exposure to five crypto assets, namely, BTC, ETH, XRP, SOL, and ADA, signalling greater certainty for more crypto asset ETFs moving forward
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