Legislation that would allow for wider distribution of research on exchange-traded funds advanced in the Senate on Thursday.
The Senate Banking Committee approved the measure, the Fair Access to Investment Research Act of 2017, by a voice vote. The bill would enable broker-dealers to provide ETF research to clients without the information being considered an unregistered offering. The practice isn't currently allowed because of a technicality in securities law that doesn't give ETFs the same safe harbor given to other vehicles, such as mutual funds.
The House version of the legislation, written by
Rep. French Hill, R-Ark., was scheduled for a vote in the House Financial Services Committee on Thursday afternoon, where it also was expected to be approved.
The bill passed the House last year
by a large margin. But it did not get through the Senate and had to be re-introduced in both chambers this year.
The measure is an example of legislation that the new Senate Banking Committee chairman, Mike Crapo, R-Idaho, is concentrating on as the panel opens the year. It has been vetted and received backing on both sides of the aisle. On Thursday, the panel
also approved four other bills by voice vote.
"It is my hope that this is the first of many markups where we advance both economic growth and investor protections through bipartisan efforts," Mr. Crapo said.
But the committee was not unanimous. Sen. Jack Reed, D-R.I., and Sen. Elizabeth Warren, D-Mass., both voted against the legislative package.
Ms. Warren offered an amendment to the ETF research bill, which she later withdrew, that would deny liability protection for brokers who write reports about ETFs in which they have a financial interest. She said that situation creates an "obvious conflict of interest" for brokers.
"This loophole must be closed if this bill is to become law," Ms. Warren said.
Mr. Hill said investors need more information about ETFs as that $2.1 trillion market becomes more popular.
"The use of ETFs continues to grow at a rapid rate," Mr. Hill said in a statement when the House bill was introduced earlier this year. "However, this complex market lacks research and information that could greatly benefit consumers. I always will advocate for commonsense legislation that promotes capital formation, removes unnecessary burdens and improves investor access to information."
