ETFs are investment companies regulated by the Investment Company Act of 1940, which prohibits the trading of funds. Thus, they need to get exemptive relief from certain regulations in order to trade like a stock. Removing this step of the registration process could cut months out the time between a fund’s initial filing and its launch.
In 2008, the SEC submitted the proposal to eliminate the exemptive relief process for industry comments. The comment period closed a while ago. I just spoke with a spokesman at the SEC about the status of the proposal. The news is no news. The SEC’s staff is currently reviewing the comments and considering the issues. There is no timetable for a decision.