Nasdaq Wants to Give New ETFs a Smoother Launch Day
Nasdaq filed a rule change on April 7 to broaden its Exchange-Traded Product (ETP) definition to embody Class ETF Shares, a hybrid product that blends mutual fund and ETF buildings.
The modification to Equity 1, Section 1(a)(15) would let issuers of those merchandise use the trade’s non-compulsory Initial ETP Open course of on their first day of buying and selling.
What the Rule Change Means for ETF Issuers
Class ETF Shares are exchange-traded shares issued by open-end funds that additionally supply conventional mutual fund share lessons.
The SEC approved Nasdaq’s generic itemizing requirements for these merchandise in November 2025 underneath Rule 5703.
Separately, the SEC approved Nasdaq’s Initial ETP Open in May 2025. That course of provides ETP issuers the choice to delay a safety’s opening from Pre-Market Hours at 4:00 a.m. ET till common Market Hours at 9:30 a.m. ET.
The delay permits the Nasdaq Halt Cross to set a gap worth, supporting extra orderly worth discovery.
Until now, solely ETPs listed underneath present Nasdaq guidelines may entry that performance. The new filing provides Rule 5703 to the record, extending the identical choice to Class ETF Shares.
A Growing Pipeline of Dual-Class Funds
The submitting arrives as asset managers race to deliver dual-class funds to market. The SEC has permitted roughly 48 companies for multi-class ETF exemptive aid out of roughly 100 functions filed as of March 2026.
Major names together with BlackRock, Fidelity, JPMorgan, and Morgan Stanley have all submitted functions.
However, operational infrastructure nonetheless lags behind regulatory progress. The DTCC’s automated resolution for processing mutual fund-to-ETF share exchanges shouldn’t be expected to go stay till May 18, 2026.
Full custodian and market maker buildouts could not observe till late 2026 or 2027.
Nasdaq’s rule took quick impact underneath Section 19(b)(3)(A)(iii) of the Securities Exchange Act.
The trade has additionally requested the SEC to waive the usual 30-day operative delay, arguing the change is a non-controversial, definitional modification that doesn’t alter present itemizing requirements or the mechanics of the Initial ETP Open.
The SEC retains the authority to briefly droop the rule inside 60 days if it determines the change raises investor safety issues.
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