Mr. Brent J. Fields

Secretary

U.S. Securities and Exchange Commission

100 F Street, NE

Washington, DC 20549

Re: Exchange-Traded Funds File No. S7-15-18

Dear Mr. Fields:

The ETF Committee of the Asset Management Group (the “AMG”) of the Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the opportunity to provide comments to the United States Securities and Exchange Commission (the “Commission”) on the Commission’s proposed new Rule 6c-11 under the Investment Company Act of 1940, as amended (the “Investment Company Act” or the “1940 Act”), that would permit exchange-traded funds (“ETFs”) that satisfy certain conditions to operate without having to obtain an exemptive order (the “Proposed Rule”). These comments supplement the comments on the Proposed Rule previously submitted by AMG.2 As indicated in the Initial AMG Letter, and as reiterated during in-person meetings with the Commission staff on October 29, 2018 (the “Staff Meeting”), AMG strongly supports the object of the Proposal – to permit ETFs to operate without the expense and delay of obtaining an exemptive order and to level the playing field for new and existing ETF sponsors. To further assist the Commission in finalizing the Proposed Rule, and based in part on our discussions during the Staff Meeting, AMG sets forth below several specific additional comments and suggestions regarding the Proposal.3

A. Disclosure of Bid-Ask Spread Information

Narrative Bid-Ask Spread Disclosure and Example

In the Initial AMG Letter, we noted that AMG is generally supportive of providing additional information to investors regarding the costs of investing in ETFs. Nevertheless, we noted that AMG has a number of comments and concerns regarding specific aspects of the Proposal, principally the required bid-ask spread disclosure and the interactive bid-ask spread calculator.

While AMG agrees with the Commission that an understanding of the impact of bid-ask spreads is important to gaining an understanding of the costs of investing in ETF shares, we believe that bid-ask spreads represent only one element of ETF trading costs. AMG believes that rather than requiring prospectus disclosure of historical bid-ask spread information, retail investors would be better served by having clear narrative disclosure regarding the potential impact of bid-ask spreads and brokerage costs on their purchases and sales of ETF shares. As noted, AMG is concerned with the utility of including the proposed historical bid-ask spread disclosures in ETF prospectuses, and recommends that the Commission reconsider the one-year historical bid-ask spread disclosure requirement.

We recommend that in lieu of providing historical bid-ask spread information in the prospectus, ETFs be required to advise investors that they may incur brokerage fees and will bear the impact of bid-ask spreads when acquiring or disposing ETF shares, and to provide a simple example that details the impact of brokerage commission and the bid-ask spread on a hypothetical purchase of ETF shares. If the Commission elects to adopt any historical bid-ask spread disclosure requirement, AMG recommends that the Commission instead adopt a 45-day look back period and require that the information be made available only on the ETF’s website (subject to appropriate narrative disclosures) in order to provide more useful and timely information about recent bid-ask spreads.

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