Under the SEC proposal, an ETF would be defined as a registered open - end management investment company that: • Issues (or redeems) creation units in exchange for the
deposit (or delivery) of basket assets the
current value of which is disseminated per share by a national securities exchange
at regular intervals during the trading day; • Identifies itself as an ETF in any sales literature; • Issues shares that are approved for listing and trading on a securities exchange; • Discloses each business day on its publicly available web site the prior business day's net asset
value and closing
market price of the fund's shares, and the premium or discount of the closing
market price against the net asset
value of the fund's shares as a percentage of net asset
value; and • Either is an index fund, or discloses each business day on its publicly available web site the identities and weighting of the component securities and other assets held by the fund.
To the extent a Fund sells securities short, it will provide collateral to the broker - dealer and (except in the case of short sales «against the box») will maintain additional asset coverage in the form of cash, U.S. government securities or other liquid securities with its custodian in a segregated account in an amount
at least equal to the difference between the
current market value of the securities sold short and any amounts required to be
deposited as collateral with the selling broker.