The Securities and Exchange Commission (SEC) has disapproved a proposed rule change submitted by the Cboe BZX Exchange, Inc., which aimed to extend the time allowed for certain exchange-traded products (ETPs) to meet minimum listing requirements. The Exchange wanted to increase the compliance period from 12 to 36 months for ETPs to have a minimum of 50 beneficial holders, arguing it aligns better with the ETP lifecycle and current market conditions. However, the SEC found that the Exchange did not provide enough evidence to ensure this change would protect against market manipulation and protect investors. Despite receiving some support from commenters, the proposal was deemed inconsistent with the necessary regulatory requirements.
Simple Explanation
The SEC said no to a plan that wanted to give certain types of stocks more time to meet certain rules because they didn't think it was safe enough for investors. They didn't believe that letting these stocks take three years instead of one to gather enough owners would be a good idea, even though some people thought it might help.