Cboe applies to SEC for approval of mutual fund ETF share classes to simplify the issuance process

On April 6, the Chicago Board Options Exchange (Cboe) submitted a rule change application to the U.S. Securities and Exchange Commission (SEC). If approved, asset management companies will be able to provide exposure to existing mutual fund portfolios in the form of ETFs, similar to the current mutual fund share classes that offer different fees and other features.

This move will provide investors with more options and make it easier for issuers to launch ETF products based on existing mutual fund performance records rather than launching new funds.

Analysts believe that if the SEC approves Cboe's application, the number of ETFs and asset size may soar.

Currently, several asset management companies have sought SEC approval to adopt a similar model. Cboe's application provides a channel for issuers to put pressure on the SEC, which must approve or reject it within 240 days.

Industry insiders believe that although the hope of approval is less than 50%, in the long run, exchanges and asset management companies working together to fight the SEC may increase their chances of success.