SEC addresses IPOs, ETFs, retail investor protections

The SEC adopted separate new rules allowing all issuers to “test the waters” for initial public offerings (IPOs) and modernizing regulation of exchange-traded funds (ETFs) while also proposing amendments designed to enhance protections for retail investors.

The test-the-waters accommodation previously had been available only to emerging growth companies. One of the new rules will allow all issuers to gauge market interest in a possible IPO or other registered securities offering through discussions with certain institutional investors before or after the filing of a registration statement.

The rule was scheduled to take effect 60 days after publication in the Federal Register.

Exchange–traded funds: The other new rule and form amendments are designed to facilitate greater competition and innovation in the ETF marketplace that could lead to more choices for investors. The rule also is designed to help ETFs come to market more quickly without the time or expense of applying for individual exemptive relief.

The SEC also voted to issue an exemptive order that further harmonizes related relief for broker-dealers.

The rule and form amendments were to take effect 60 days after publication in the Federal Register, with a one-year transition period for compliance with the form amendments.

Investor protection proposal: The recent proposal also would establish requirements for broker-dealers to meet before they can publish quotations for securities in the over-the-counter market.

Public comments were to be accepted at the SEC’s website for 60 days following publication of the proposal in the Federal Register.