SEC Rule 6c-11

Overview and Regulatory Purpose

The exchange-traded fund is the most significant financial product innovation in the history of the registered investment company industry — a structure that combines the diversification and professional management of a mutual fund with the intraday tradability and price transparency of a listed equity security, delivered at expense ratios that have driven a fundamental restructuring of the retail and institutional investment landscape since the early 1990s.

ETFs achieved this market penetration not through regulatory design but despite regulatory architecture: the Investment Company Act of 1940 was drafted to govern the mutual fund as a vehicle in which investors purchase and redeem shares directly from the fund at net asset value, and its specific provisions — particularly the definitions of redeemable security, open-end management company, and the Section 22(d) and Rule 22c-1 pricing requirements — were structurally incompatible with an exchange-traded product whose shares trade at market-determined prices throughout the trading day.

The first ETF sponsors addressed this incompatibility by applying to the Commission for individual exemptive orders — formal Commission orders granting relief from specific Investment Company Act provisions for a particular ETF or family of ETFs, typically subject to negotiated conditions specific to that sponsor's proposed structure.

For twenty-six years, every domestic ETF that wished to launch was required to navigate this exemptive order process — a procedure that consumed substantial legal and regulatory resources, imposed significant launch timelines, and resulted in a fragmented regulatory landscape in which different ETFs operating in essentially identical structures were subject to slightly different conditions based on the specific terms of their individual orders.

The Commission's stated objectives in adopting Rule 6c-11 were to create a consistent, transparent, and efficient regulatory framework for ETFs, facilitate greater competition and innovation in the ETF market by lowering the barrier to entry, and establish a uniform set of conditions that protect investors while enabling the ETF structure's fundamental operational characteristics to function within the Investment Company Act framework.

Statutory Authority and Rulemaking History

Rule 6c-11 derives its statutory authority from Section 6(c) of the Investment Company Act of 1940, which authorises the Commission to conditionally or unconditionally exempt any person, security, or transaction from any provision of the Act if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.

Section 6(c) is the foundational exemptive authority for all Commission-issued ETF exemptive orders and for Rule 6c-11 itself — the rule operates as a standing, self-effectuating exemptive order whose conditions any qualifying ETF may satisfy without seeking individual Commission approval.

The Commission first proposed Rule 6c-11 in March 2008, shortly before the financial crisis, but did not finalise the rule at that time.

A reproposal was published in June 2018 following the Commission's decision to revisit the ETF regulatory framework in light of the industry's dramatic growth — from approximately $500 billion in assets under management in 2008 to nearly $4 trillion by 2018. The final rule was adopted September 25, 2019 — Investment Company Act Release No. IC-33646 — with an effective date of December 23, 2019 and a one-year compliance period for form amendments that ran through December 23, 2020.

One year after the effective date, the Commission rescinded the prior individual exemptive orders granted to ETFs eligible to operate under Rule 6c-11, completing the transition from the prior patchwork regime to the rule-based framework. Rule 6c-11 has been amended once since adoption, by a release published at 85 FR 83291 on December 21, 2020. As the rule now reads, paragraph (c)(4) requires leveraged and inverse ETFs relying on the rule to comply with Rule 18f-4.

Key Provisions and Operative Requirements

Rule 6c-11(a) establishes the structural eligibility conditions that an ETF must satisfy to rely on the rule. The ETF must be a registered open-end management investment company — organised as a registered fund under the Investment Company Act — that issues and redeems shares only in aggregations of shares known as creation units, and only to and from authorised participants.

The creation unit structure — in which shares are created and redeemed in large blocks, typically 10,000 to 100,000 shares or more, through in-kind or cash transactions with authorised participants rather than through direct retail transactions with individual investors — is the fundamental structural distinction between an ETF and a conventional open-end mutual fund, and it is the structural feature that makes the ETF's exchange-traded, market-priced secondary market function possible. 

The ETF's shares must be listed on a national securities exchange and traded at market-determined prices — the requirement that anchors the ETF's tradability on a secondary market and distinguishes it from both mutual funds, whose shares are purchased and redeemed at NAV, and closed-end funds, whose shares trade at market prices but do not have a creation and redemption mechanism maintaining price discipline through arbitrage.

Rule 6c-11(b) establishes that an ETF meeting the rule's conditions is entitled to the following exemptive relief from specific Investment Company Act provisions:

The exemption from Section 2(a)(32)'s redeemable security definition — which defines a redeemable security as any security, other than short-term paper, under the terms of which the holder, upon its presentation to the issuer or to a person designated by the issuer, is entitled to receive approximately his proportionate share of the issuer's current net assets — treats ETF shares as redeemable securities notwithstanding the fact that individual ETF shareholders cannot present their shares directly to the fund for redemption in the manner that conventional mutual fund shareholders can.

ETF shareholders can only redeem creation units through authorised participants, but the creation unit redemption mechanism satisfies the functional purpose of the redeemable security definition sufficiently to warrant treating ETF shares as redeemable for the beneficial regulatory consequences that status provides.

Rule 6c-11 grants no separate exemption from Section 5(a)(1)'s open-end company definition, which defines an open-end company as a management company that is offering for sale or has outstanding any redeemable security. Because the rule treats an ETF share as a redeemable security within the meaning of Section 2(a)(32), an ETF falls within that definition and is classified as an open-end management investment company, using the regulatory infrastructure, disclosure forms, and investor protections associated with that classification without any relief from Section 5(a)(1).

The exemptions from Section 22(d) and Rule 22c-1 — which together require that mutual fund shares be sold at a uniform price equal to the fund's net asset value per share — permit ETF shares to trade on secondary markets at market-determined prices that may be above or below the fund's intraday indicative value or closing NAV.

This exemption is the provision that makes the ETF's exchange-traded character possible: without it, every secondary market transaction in ETF shares would need to occur at NAV, eliminating the price discovery and intraday liquidity that distinguish ETFs from conventional mutual funds and make them attractive to traders and investors who need intraday execution flexibility.

The exemptions from Sections 17(a)(1) and 17(a)(2) — which prohibit affiliated transactions between a registered investment company and its affiliates — permit a person who is an affiliated person of the ETF, or an affiliated person of such a person, solely because it holds with the power to vote 5% or more of the ETF's shares or of an investment company affiliated with the ETF, to deposit baskets into and receive baskets from the ETF in connection with creation and redemption transactions. The exemption does not reach affiliation that exists for any other reason between the ETF, its investment adviser, its authorised participants, and the broker-dealers that facilitate secondary market trading.

Without this exemption, the basket transaction mechanics of ETF creation and redemption would be impeded whenever an authorised participant or market maker is an affiliated person of the ETF because it holds with the power to vote 5% or more of the ETF's shares.

Rule 6c-11(c) and (d) establish the four categories of ongoing compliance conditions that an ETF must continuously satisfy to maintain eligibility for the rule's exemptive relief.

The first ongoing condition is daily portfolio transparency. An ETF must disclose prominently on its website, in a manner that is publicly available and free of charge, the portfolio holdings that will form the basis for the ETF's calculation of per share NAV at the beginning of the business day — before the market opens for trading.

This daily portfolio disclosure requirement is the cornerstone of Rule 6c-11's investor protection framework, enabling market participants — particularly the authorised participants and market makers who maintain the arbitrage mechanism that keeps ETF secondary market prices aligned with NAV — to assess the ETF's portfolio composition with precision on each trading day. 

Non-transparent actively managed ETFs — those that do not disclose daily portfolio holdings because doing so would reveal proprietary investment strategies — cannot satisfy this condition and therefore cannot rely on Rule 6c-11, instead requiring individual exemptive orders that accommodate reduced transparency through alternative arbitrage mechanisms.

The second ongoing condition is website disclosure of trading cost and efficiency information. An ETF must disclose prominently on its website, publicly available and free of charge, specific categories of information enabling investors to assess the cost and efficiency of ETF investing: the fund's current net asset value per share; any premium or discount of the ETF's closing price to NAV; the median bid-ask spread for the thirty most recent calendar days; and, where the ETF's premium or discount to NAV has exceeded 2% for more than seven consecutive trading days, a specific enhanced disclosure identifying that condition and discussing the factors that are reasonably believed to have materially contributed to the persistent premium or discount.

The seven-consecutive-trading-day enhanced disclosure trigger is designed to alert investors to conditions where the ETF's arbitrage mechanism has been temporarily or persistently impaired — a condition that may reflect structural issues with the ETF's basket composition, liquidity constraints on the underlying portfolio securities, or market-wide disruptions affecting the authorised participant's ability to engage in creation and redemption activity.

The third ongoing condition is written policies and procedures governing basket construction. An ETF must adopt and implement written policies and procedures that govern the construction of creation and redemption baskets and the process for accepting custom baskets — defined as baskets that do not reflect a pro-rata representation of the ETF's portfolio or that differ from the initial basket used in transactions on the same business day.

The custom basket accommodation is one of Rule 6c-11's most commercially significant provisions, enabling ETFs to accept creation baskets composed of securities that are not in exact proportion to the fund's portfolio holdings — a flexibility that reduces transaction costs, facilitates ETF launches with seed portfolios, and enables more efficient management of portfolio transitions and corporate action events.

The written policies and procedures for custom baskets must set forth detailed parameters for the construction and acceptance of custom baskets that are in the best interests of the ETF and its shareholders, including the process for any revisions to, or deviations from, those parameters, and must specify the titles or roles of the employees of the ETF's investment adviser who are required to review each custom basket for compliance with those parameters.

The fourth ongoing condition is recordkeeping. An ETF must maintain records of each creation and redemption basket for at least five years, the first two in an easily accessible place.

For custom baskets specifically, the basket record must identify the basket as a custom basket and include a record stating that the custom basket complies with the policies and procedures the ETF adopted under Rule 6c-11(c)(3).

When it was adopted in 2019, Rule 6c-11 excluded leveraged and inverse ETFs from the rule's scope. A leveraged ETF — one that seeks to deliver a daily return that is a multiple of the return of a benchmark index — and an inverse ETF — one that seeks to deliver the inverse or a multiple of the inverse of the index's daily return — present investor protection concerns specific to their use of derivatives and their daily reset mechanics, and the 2019 rule left them under individual exemptive orders. The December 2020 amendment replaced that exclusion: Rule 6c-11(c)(4) now requires such an ETF to comply with all applicable provisions of Rule 18f-4, and on that condition it may rely on Rule 6c-11.

This change has significant commercial consequence: leveraged and inverse ETFs in the domestic market can rely on Rule 6c-11 rather than on individual exemptive orders, provided they also meet Rule 18f-4's derivatives framework, whose conditions apply to them as a condition of that reliance.

Scope of Application

Rule 6c-11 applies to ETFs structured as registered open-end management investment companies — the primary ETF structure in the domestic market. It does not apply to ETFs structured as unit investment trusts, which include some of the oldest and largest domestic ETFs — including the SPDR S&P 500 ETF Trust and the SPDR Gold Trust — whose UIT structure predates the Investment Company Act's open-end management company framework and whose individual exemptive orders remain the operative regulatory basis for their structure. It does not apply to commodity pools or other non-Investment Company Act-registered products that use the ETF name and exchange-traded structure.

Non-transparent actively managed ETFs — products launched under the Commission's 2020 approval of the first semi-transparent and non-transparent ETF structures — operate under individual exemptive orders rather than Rule 6c-11, since their failure to disclose daily portfolio holdings means they cannot satisfy Rule 6c-11(c)(1)'s daily transparency condition. As confirmed by the May 2026 Precidian ETF Trust II application for modification of its exemptive order, the non-transparent ETF sector continues to develop under the individual exemptive order framework alongside but distinct from Rule 6c-11's standardised regime.

Self-indexing ETFs — funds whose portfolio tracks an index created and maintained by the fund's adviser or an affiliate — are specifically permitted under Rule 6c-11 without additional conditions, reversing the prior practice of imposing specific conditions in individual exemptive orders addressing potential conflicts of interest in self-indexing arrangements.

Relationship to Related Rules and Regulations

Rule 6c-11's exemption from Rule 22c-1's forward pricing requirement connects directly to the ETF's intraday pricing mechanics — the rule's relief from the requirement that fund shares be purchased and redeemed at the next calculated NAV is what enables ETF shares to trade continuously at market-determined prices throughout the trading day without violating the Investment Company Act's investor protection framework.

This exemption is the legal foundation for the entire secondary market structure of the ETF industry, including the market-making, arbitrage, and liquidity provision activities of authorised participants and market makers that maintain price efficiency in the ETF market.

Rule 6c-11's daily portfolio disclosure requirement interacts with the Regulation NMS framework — particularly Rule 602's quotation dissemination requirements and Rule 611's order protection rule — through the ETF's daily publication of its portfolio holdings.

The intraday indicative value — which Rule 6c-11 does not require an ETF to publish — is the reference point against which market participants assess whether the ETF's secondary market price represents a premium or discount to the underlying portfolio's real-time value, and it is the informational foundation for the arbitrage mechanism that keeps ETF prices aligned with NAV.

Rule 12d1-4's fund of funds framework governs the circumstances in which ETFs may invest in other registered funds — including other ETFs — and in which other registered funds may invest in ETFs. The interaction between ETFs and the fund of funds framework is commercially significant for ETF-of-ETF structures, multi-asset allocation ETFs that hold other ETFs as portfolio components, and target-date fund structures that use ETFs as building blocks. Rule 12d1-4 replaced the prior patchwork of fund of funds exemptive orders and provides the standardised framework within which most ETF fund of funds arrangements now operate.

Rule 18f-4's derivatives framework applies to ETFs that use derivatives as components of their investment strategy — including options-writing strategies, tail-risk hedging approaches, and the full range of derivative instruments that active ETFs increasingly incorporate. For leveraged and inverse ETFs, which Rule 6c-11(c)(4) permits to rely on Rule 6c-11 only if they comply with Rule 18f-4, the derivatives rule's conditions governing portfolio-level Value at Risk limits and derivatives risk management programmes are part of the conditions of that reliance.

Rule 35d-1's investment company names rule applies to ETFs whose names suggest a specific investment focus — sector ETFs, thematic ETFs, geographic ETFs, and factor-based ETFs whose names connote a specific type of portfolio — requiring that such ETFs adopt an 80% investment policy committing to invest at least 80% of their assets in the category of investment suggested by their name.

The names rule's application to the ETF market is commercially significant given the proliferation of narrowly focused and thematic ETFs whose names make specific investment implications that the 80% policy requirement enforces.

Amendment History and Regulatory Evolution

Rule 6c-11 has been amended once since its September 2019 adoption. The amendment, published at 85 FR 83291 on December 21, 2020, brought leveraged and inverse ETFs within the rule on condition that they comply with Rule 18f-4.

The rule's transition provision — rescinding prior individual exemptive orders one year after the effective date for ETFs eligible to operate under Rule 6c-11 — was completed on schedule in December 2020, completing the migration of the ETF industry to the rule-based framework.

The most significant post-adoption developments in the Rule 6c-11 landscape have involved the non-transparent ETF sector — the continued development of semi-transparent and non-transparent ETF structures under individual exemptive orders outside the rule's framework, as confirmed by the May 2026 Precidian ETF Trust II application and the broader pipeline of non-transparent actively managed ETF applications.

The Commission's monitoring of non-transparent ETF market development may eventually prompt consideration of whether Rule 6c-11 should be expanded to accommodate non-transparent structures, either through a separate rule provision or through modification of the daily disclosure condition, though no such proposal had been published through June 2026.

The ETF market's continued growth — from approximately $4 trillion in assets under management at the time of Rule 6c-11's adoption to over $10 trillion by mid-2026 — has generated ongoing Commission attention to ETF market structure and investor protection questions, including the adequacy of the premium/discount disclosure framework, the effectiveness of the custom basket policies and procedures requirement, and the treatment of ETFs in the broader fund of funds and derivatives regulatory frameworks.

Enforcement Context and SEC Action Patterns

Rule 6c-11 enforcement has concentrated on two primary compliance areas since the rule's implementation. The first is the daily portfolio disclosure requirement — the Commission's Office of Examinations has identified instances where ETFs failed to publish complete portfolio holdings before market open, or where the holdings information published did not accurately reflect the composition that would be used for NAV calculation, undermining the arbitrage transparency that the requirement is designed to support.

The second area is custom basket policies and procedures — examinations have identified ETFs whose written policies lacked the specificity required by Rule 6c-11(c)(3)'s detailed parameters requirement, or whose custom basket transactions were inadequately documented to demonstrate compliance with the best interests condition.

The Division of Investment Management has addressed Rule 6c-11 compliance questions through the frequently asked questions framework, and the Commission has continued to monitor ETF market events — including episodes of significant premium and discount volatility during market stress periods — for implications regarding the adequacy of Rule 6c-11's arbitrage and transparency framework.

Authorised Participants, Baskets and the Cash Balancing Amount

Rule 6c-11(a) defines the terms the rule works with. An authorised participant is a member or participant of a clearing agency registered with the Commission that has a written agreement with the ETF, or with one of its service providers, allowing it to place orders for the purchase and redemption of creation units. A broker-dealer that trades an ETF's shares actively on the exchange but has no such agreement is not an authorised participant of that ETF, and it cannot place orders for creation units.

A basket is the securities, assets or other positions in exchange for which an ETF issues creation units, or in return for which it redeems them. A creation unit is a specified number of ETF shares that the ETF issues to, or redeems from, an authorised participant in exchange for a basket and a cash balancing amount, if any. The cash balancing amount is an amount of cash that accounts for any difference between the value of the basket and the net asset value of a creation unit. Where the basket exchanged for a creation unit is worth less than the creation unit's net asset value, the cash balancing amount makes up the difference.

A custom basket is either a basket composed of a non-representative selection of the ETF's portfolio holdings, or a representative basket that is different from the initial basket used in transactions on the same business day. A representative basket can therefore still be a custom basket. If the first basket an ETF uses in transactions on a business day is one representative basket and it later accepts a different representative basket on the same business day, the later basket is a custom basket, and the ETF's custom basket policies and procedures apply to it.

Selling Individual Shares in a Reorganisation, Merger or Liquidation

Rule 6c-11's definition of an ETF requires it to issue and redeem creation units with authorised participants. Rule 6c-11(a)(2) makes one exception. Notwithstanding that definition, an ETF is not prohibited from selling or redeeming individual shares on the day of consummation of a reorganisation, merger, conversion or liquidation, and in those circumstances it is not limited to transactions with authorised participants. An ETF that redeems individual shares held by investors on the day its liquidation is consummated is therefore still an ETF within the meaning of the rule.

Which Affiliated Persons the Section 17(a) Exemption Reaches

The exemption from Sections 17(a)(1) and 17(a)(2) in Rule 6c-11(b)(3) applies only to the deposit and receipt of baskets. It covers a person who is an affiliated person of the ETF, or an affiliated person of such a person, solely because that person holds with the power to vote 5% or more of the ETF's shares, or 5% or more of any investment company that is an affiliated person of the ETF.

Suppose an authorised participant holds, with the power to vote, 8% of an ETF's shares and has no other connection to the ETF. It is an affiliated person only because of that holding, so it may deposit a basket in exchange for creation units under the exemption. A person that is affiliated with the ETF for some other reason, such as being under common control with the ETF's adviser, is not affiliated solely because of a 5% holding, so the exemption in Rule 6c-11(b)(3) does not cover its basket transactions.

Foreign Investments and the Seven-Day Redemption Limit

Section 22(e) of the Investment Company Act prohibits postponing the date of satisfaction upon redemption for more than seven days after the tender of a redeemable security. Rule 6c-11(b)(4) gives an ETF a limited exemption from that prohibition. It applies where the ETF includes a foreign investment in its basket, meaning a security, asset or other position issued by a foreign issuer and traded on a trading market outside the United States, and a local market holiday, a series of consecutive holidays, or the extended delivery cycles for transferring foreign investments to redeeming authorised participants prevents timely delivery of the foreign investment in response to a redemption request.

The exemption covers only the delivery of the foreign investment. The ETF must deliver it as soon as practicable, and in no event later than 15 days after the tender of the ETF shares. If a holiday in a foreign market delays delivery of a basket's foreign shares, the ETF may deliver them on the tenth day after the authorised participant tendered its creation unit if that is as soon as practicable, but in no case on the sixteenth.

The Holdings Published Before Each Day's Open

Rule 6c-11(c)(1) requires an ETF to disclose information prominently on its website, publicly available and free of charge, each business day. Before the opening of regular trading on the primary listing exchange of its shares, the ETF must show, for each portfolio holding that will form the basis of the next calculation of current net asset value per share, the ticker symbol, the CUSIP or other identifier, a description of the holding, the quantity held, and the holding's percentage weight in the portfolio.

Under Rule 6c-11(c)(2), the holdings that form the basis for that next calculation must be the ETF's portfolio holdings as of the close of business on the prior business day. A security the adviser buys for the ETF during Tuesday's trading session and still holds at Tuesday's close therefore appears in the holdings published before Wednesday's open, where Wednesday is the next business day, and not in those published before Tuesday's.

Market Price, Premium or Discount, and the Premium History

The website must also show the ETF's current net asset value per share, its market price and its premium or discount, each as of the end of the prior business day. The rule defines market price as the official closing price of an ETF share or, if it more accurately reflects the market value of an ETF share at the time as of which the ETF calculates current net asset value per share, the midpoint between the national best bid and national best offer as of that time.

The premium or discount is the positive or negative difference between the market price of an ETF share at the time as of which current net asset value is calculated and the ETF's current net asset value per share, expressed as a percentage of the current net asset value per share. An ETF share with a market price of $50.50 and a net asset value per share of $50.00 is at a premium of 1%.

The website must also carry a table showing the number of days the ETF's shares traded at a premium or discount during the most recently completed calendar year and the most recently completed calendar quarters since that year, and a line graph showing the premiums or discounts for the same periods. For an ETF whose life is shorter, both cover the life of the ETF.

The Median Bid-Ask Spread and the Persistent Premium Statement

The ETF must show its median bid-ask spread, expressed as a percentage rounded to the nearest hundredth. The figure is computed by identifying the ETF's national best bid and national best offer as of the end of each 10-second interval during each trading day of the last 30 calendar days, dividing the difference between each such bid and offer by the midpoint of the national best bid and national best offer, and identifying the median of those values.

Where the ETF's premium or discount is greater than 2% for more than seven consecutive trading days, the website must carry a statement that the premium or discount was greater than 2% and a discussion of the factors reasonably believed to have materially contributed to it. That statement and discussion must be maintained on the website for at least one year thereafter.

The Records Behind Each Basket

Rule 6c-11(d) requires the ETF to maintain and preserve two kinds of record for a period of not less than five years, the first two years in an easily accessible place. The first is every written agreement, or a copy of it, between an authorised participant and the ETF or one of its service providers that allows the authorised participant to place orders for the purchase or redemption of creation units.

The second is a record for each basket exchanged with an authorised participant. It sets out the ticker symbol, CUSIP or other identifier, description of holding, quantity and percentage weight of each holding composing the basket; if applicable, the identification of the basket as a custom basket and a record stating that the custom basket complies with the ETF's custom basket policies and procedures; the cash balancing amount, if any; and the identity of the authorised participant transacting with the ETF.

Leveraged and Inverse ETFs Under Rule 6c-11(c)(4)

Rule 6c-11 was amended by a release published at 85 FR 83291 on December 21, 2020. As the rule now reads, paragraph (c)(4) provides that an ETF that seeks, directly or indirectly, to provide investment returns that correspond to the performance of a market index by a specified multiple, or to provide investment returns that have an inverse relationship to the performance of a market index, over a predetermined period of time, must comply with all applicable provisions of Rule 18f-4. An ETF seeking twice the daily return of an index, or the inverse of it, may therefore rely on Rule 6c-11, provided it complies with Rule 18f-4 as well as with Rule 6c-11's other conditions.

Examination Relevance and Key Takeaways

Rule 6c-11 is examined at the Series 7 and Series 65 levels as the foundational regulatory framework governing the operation of exchange-traded funds. The five specific Investment Company Act provisions from which the rule grants exemptive relief — Sections 2(a)(32), 22(d), Sections 17(a)(1) and 17(a)(2), Section 22(e) for foreign investments, and Rule 22c-1 — and the structural rationale for each exemption are primary examination concepts.

The rule's four ongoing compliance conditions — daily portfolio transparency, premium/discount and bid-ask spread website disclosure, written basket policies and procedures, and five-year recordkeeping — are consistently examined at both the Series 7 and Series 65 levels.

The condition that leveraged and inverse ETFs relying on Rule 6c-11 comply with Rule 18f-4 is a frequently examined distinction, as is the exclusion of non-transparent actively managed ETFs that do not satisfy the daily portfolio disclosure condition.

The ETF creation and redemption mechanism — creation units issued to and redeemed from authorised participants in exchange for baskets of securities and cash — is the structural foundation examined as the basis for understanding why Rule 6c-11's specific Investment Company Act exemptions are necessary.

The key points to retain are these. Rule 6c-11 permits ETFs structured as registered open-end management investment companies to operate without individual exemptive orders, provided they issue and redeem creation units only through authorised participants, list shares on a national securities exchange for secondary market trading at market-determined prices, and satisfy four ongoing compliance conditions: daily website disclosure of portfolio holdings before market open; website disclosure of premium/discount history, bid-ask spread data, and enhanced disclosure when the premium or discount exceeds 2% for more than seven consecutive trading days; written policies and procedures governing basket construction and custom basket acceptance; and five-year recordkeeping for basket transactions.

The rule grants exemptive relief from Sections 2(a)(32), 22(d), 17(a)(1) and 17(a)(2) of the Investment Company Act, from Section 22(e) for foreign investments, and from Rule 22c-1. Non-transparent actively managed ETFs are excluded from the rule's scope, and leveraged and inverse ETFs may rely on it only if they comply with Rule 18f-4. Prior individual exemptive orders for Rule 6c-11-eligible ETFs were rescinded December 2020. Rule 6c-11 was adopted September 25, 2019, effective December 23, 2019, and was amended once, in December 2020 (85 FR 83291).