Most open-end ETFs now operate under SEC Rule 6c-11, which eliminated the need for individual exemptive relief but introduced daily disclosure requirements. Many asset managers find these requirements operationally challenging.

From website transparency rules to custom basket policies and six-year recordkeeping mandates, staying compliant comes down to using systematic processes. This guide walks you through qualification criteria, compliance requirements, and practical implementation strategies for operating ETFs under SEC Rule 6c-11.

What is rule 6c-11?

The SEC adopted Rule 6c-11 on September 25, 2019, with an effective date of December 23, 2019. 

The rule leveled the playing field by eliminating the costly, time-consuming exemptive relief process for most ETFs, standardizing and streamlining ETF operations. It  allows most open-ended, fully transparent exchange-traded funds to sell and trade shares without each issuer having to get an individual ETF exemptive order from the SEC. 

In order to operate your ETF under this rule, the Securities and Exchange Commission requires you to be in compliance.

Does your ETF qualify for rule 6c-11?

Not all ETFs can operate under Rule 6c-11. The rule applies exclusively to open-end, fully transparent ETFs, which means your fund must disclose its portfolio holdings every day.

If your ETF meets these criteria, you can operate without seeking individual exemptive relief from the SEC. However, you must maintain strict compliance with the rule’s requirements.

Rule 6c-11 applies to most open-end funds. These include:

• Index-based ETFs
• Self-indexed ETFs
• Actively managed, fully transparent ETFs

The rule does not benefit or include:

• Unit investment trusts (UITs)
• Leveraged and inverse ETFs
• Non-transparent or semi-transparent ETFs
• ETFs structured as a share class of a multi-class fund

Additionally, fund-of-funds ETFs and master-feeder structures may face additional compliance considerations under Rule 6c-11, depending on their ability to meet daily transparency requirements.

Action items

Here are the specific steps you can take right now to address these compliance requirements.

1. Determine if your ETF qualifies for Rule 6c-11. If it is open end and fully transparent, it should qualify.
2. If your ETF is non-transparent or leveraged/inverse, identify the need for exemptive relief. Exemptive reliefs are legal exemptions granted by the Securities and Exchange Commission that allow a fund to operate outside of the normal rules of the Investment Company Act of 1940. This will be necessary for certain fund structures.
3. Review the fund structure against Rule 6c-11 exclusions. UITs, levered and inverse ETFs, and non-transparent ETFs, etc.
4. Document your ETF’s qualification status for compliance records. Record keeping and documentation are critical.

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How to stay compliant

Rule 6c-11 compliance has three pillars: daily website transparency, written policies for custom baskets, and thorough recordkeeping and reporting.

Website disclosures

Your ETF must post complete portfolio holdings on its website before the market opens each trading day. Website disclosure is a non-negotiable ETF portfolio transparency requirement, forming the foundation of 6c-11 compliance.

Required daily disclosures:

• Ticker symbol
• CUSIP and other identifiers
• Description of each holding
• Quantity of each security or asset held
• Percentage weight of each holding in the portfolio
• Net Asset Value (NAV) of the fund
• Market price, premium, and discount
• Median bid-ask spread
• One-year historical data on premiums and discounts

Custom basket policies and procedures

Custom baskets allow authorized participants (APs) — market makers who create and redeem ETF shares — to use non-standard securities during the creation/redemption process. This flexibility can benefit your ETF but also requires strict governance.

Your ETFs are also required to maintain written policies that detail the parameters for the construction of creation units and redemption baskets. These policies should include:

1. Construction and acceptance parameters. These parameters must be in the best interest of the ETF and its shareholders.
2. Amendment procedures. A detailed, documented process for making changes to the above-mentioned parameters.
3. Review responsibilities. Names and titles of everyone authorized to review and approve custom basket parameters.

Recordkeeping for authorized participant transactions

In addition to policies, you must also keep detailed records of all AP interactions. 

This includes storing written agreements with each authorized participant and documentation of every basket exchanged, including the quantity and percentage weight of each holding in those baskets.

These records must be retained for at least six years, with the first two years in an easily accessible location. 

Action items

1. Audit the ETF’s current website. Ensure that all required disclosure fields are present and updated correctly before market open.
2. Create a daily disclosures checklist. This should include assigned responsibilities and backup coverage for your operations team.
3. Draft or update written custom basket policies and procedures. Include clear criteria for what constitutes “best interest” decisions.
4. Identify personnel responsible for custom basket reviews. Make sure you hang on to all data and records regarding the assigned personnel.
5. Set up a recordkeeping system for AP agreements and basket transaction data. Include proper retention timelines and access protocols.

Disclosure formatting and special requirements 

Rule 6c-11 mandates specific formats for certain disclosures and triggers additional reporting when market conditions create significant premiums or discounts.

Premium and discount reporting format

Every day the market is open, an ETF needs to disclose certain information on its website. 

Your website must display premiums and discounts using both a table and a line graph. These visualizations must cover:

• The most recent complete calendar year
• All calendar quarters of the current year

The above metrics show how your ETF’s secondary market price relates to its NAV.

Triggered disclosure requirements

Be aware that if the premium or discount exceeds 2% for more than seven consecutive trading days in a row, you are required to disclose that information and reveal the factors that contributed to it.

This means immediately disclosing:

• That the threshold has been breached
• The specific factors that contributed to the deviation
• Any steps being taken to address the situation

Triggered disclosures are separate from your daily reporting and require specific attention from your compliance team. Missing this requirement is a common compliance violation.

Median bid-ask spread calculation

To remain compliant, make sure you are displaying a median bid-ask spread calculated over the past 30 calendar days.

This metric helps investors understand trading costs and must be updated continuously as new trading days occur.

Internal documentation requirements

Although disclosures are public-facing, you must also maintain internal documentation of your:

• Basket-construction methodology
• Custom basket acceptance processes
• Representative sampling techniques, if applicable
• Compliance testing procedures
• Control mechanisms to prevent unauthorized basket modifications

Remember, non-transparent ETFs that don’t meet 6c-11 conditions need to apply for exemptive relief from the SEC. This means filing a proposed rule change asking the SEC to amend its own rules.

Action items

1. Review disclosure formatting. Verify your website displays premiums and discounts in both table and line graph format, covering the required timeframes.
2. Implement monitoring system for 2% premium/discount threshold. Remember, seven consecutive trading days at over 2% requires further compliance procedures.
3. Calculate and post median bid-ask spreads for the past 30 days. The last 30 calendar days must be displayed.
4. Create a master document for your basket construction methodology. Make sure you are disclosing all aspects of the methodology, including decision trees for accepting or rejecting custom baskets.
5. Arrange a compliance testing schedule for all procedures. This should be at least quarterly, and document all controls you have in place.

Staying compliant: daily and long-term reporting requirements under SEC rule 6c-11

Rule 6c-11 is a daily reporting commitment, so you need consistent workflows, backup systems, and long-term data retention practices to avoid non-compliance. Missing even a single day of required disclosures will put your ETF out of compliance.

Daily pre-market requirements

Portfolio holdings must be posted prior to the opening of each business day. Before the market opens, your operations team must:

• Update and publish complete portfolio holdings
• Calculate and post current NAV, market price, and premium/discount data
• Update the rolling 30-day median bid-ask spread
• Verify all disclosure formatting remains correct

Accessibility and retention standards

Your ETF’s website must make all disclosures freely and readily available, without requiring login credentials, subscriptions, or registration.

Investors should be able to find this information intuitively, typically through a dedicated “regulatory information” or “daily holdings” page.

Recordkeeping timeline:

• Minimum retention: All reports and records must be retained for at least six (6) years from the end of the fiscal year in which the transaction occurred.
• Easily accessible: The most recent two (2) years must be immediately retrievable, not in archived storage. Years two through six can be stored in less accessible archive systems but must be retrievable upon request.
• Scope: Includes all daily disclosures, AP agreements, custom basket transactions, and internal policy documentation.

Building resilient processes

Single points of failure create compliance risk. Your reporting can’t stop because one person is sick or systems go down during critical hours. Build redundancy into every step of your compliance workflow.

Action items

1. Map your complete daily reporting workflow with specific timing requirements (e.g., “update website by 9:00 a.m. ET”) and assign primary and backup personnel to each task.
2. Implement a six-year retention system with automated alerts before records age out. Ensure two-year-old records transfer to longer-term storage on schedule.
3. Verify automated alert systems notify compliance officers when premiums or discounts reach 1.5% for multiple days. This gives advance warning before the 2% threshold triggers additional disclosure.
4. Create a responsibility matrix that assigns specific team members to daily tasks, periodic disclosures (triggered by the 2% threshold), and annual filings (Form N-CEN).
5. Document and test backup procedures quarterly, including scenarios for system failures, staff absences, and market holidays.

Common compliance challenges with rule 6c-11

Rule 6c-11 compliance creates ongoing operational burdens that many asset managers underestimate during the planning phase. Understanding these challenges upfront helps you budget appropriately and build resilient processes.

Daily pressure

The pre-market disclosure deadline creates unforgiving time pressure. Your team must calculate, verify, and publish all required data before the market opens every trading day. There’s no grace period for system failures, staff absences, or data quality issues. You’ll need dedicated personnel, strong backup systems, and straightforward escalation procedures for when things go wrong.

Technology and infrastructure investments

Manual compliance processes don’t scale. Most asset managers invest in automation tools for:

• Portfolio data aggregation and validation
• NAV calculation and verification
• Website publishing systems with version control
• Premium/discount monitoring and alerting
• Recordkeeping with proper retention guidelines

Typically, these systems incur upfront implementation costs in addition to ongoing maintenance, licensing fees, and regular upgrades. 

Staffing and expertise requirements

6c-11 compliance isn’t something you can “set it and forget.” Your staff must understand:

• ETF market mechanics and authorized participant relationships
• Custom basket construction parameters and best-interest standards
• Data integrity verification procedures
• SEC examination protocols and documentation requirements

Many asset managers designate a dedicated compliance officer or operations specialist to own daily reporting, with additional backup coverage to ensure continuity.

Market volatility

When markets are stressed, premiums and discounts tend to swing. The seven-day/2% threshold for triggered disclosures often catches asset managers off guard because it requires active monitoring, you must explain the factors (not just the numbers) behind the deviation, and the disclosure must occur promptly once the threshold is breached.

Building monitoring systems that alert you at 1.5% or earlier gives your compliance team time to prepare appropriate disclosures before the requirement triggers.

Consequences of non-compliance

Knowing the requirements is important for compliance, but you should also be aware of the consequences of failing to comply. Non-compliance can result in:

• SEC deficiency letters requiring remediation plans
• Enforcement actions and potential fines
• Operational disruptions if the SEC suspends your ability to operate under 6c-11
• Reputational damage with authorized participants and investors
• Potential requirement to seek exemptive relief (a lengthy, expensive process)

The SEC actively examines ETF compliance during routine inspections, so consistent adherence is key.

Action items

1. Calculate your total annual compliance budget. Include technology licensing, staffing, data feeds, and backup systems, as well as cybersecurity and disaster recovery.
2. Conduct a gap analysis of your current technology stack. Can your systems reliably publish data before market open? Do you have automated alerts? Can you recreate historical calculations for SEC examination?
3. Create a detailed process map. Show every step from data collection to website publication, identifying single points of failure and building redundancy into critical steps.
4. Establish a premium/discount monitoring protocol. Include automated alerts at 1.5% (advance warning) and 1.8% (preparation mode) so you're never caught off guard by the 2% threshold.
5. Run a compliance cost-benefit analysis. Compare the investment in automation and staffing against the operational risk and potential enforcement costs of manual processes or non-compliance.

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How to maintain regulatory adherence to rule 6c-11

Staying in compliance could seem an overwhelming task, which is why it’s essential to have a constant monitoring procedure for your compliance processes, reports, and records. You’ll also need to stay abreast of any new rules, as well as changes made to ETF rules.

Establish regular compliance reviews

Schedule internal audits before the SEC does. Quarterly reviews should check website disclosure accuracy, custom basket transactions, and premium/discount breaches. Annual reviews should audit complete documentation, update policies, and assess technology performance.

Required SEC filings for ETFs

Beyond daily disclosures, ETFs must file the following.

Initial registration:

• Form N-1A: All new ETFs must file form N-1A, the standard registration statement that includes the fund’s prospective.

• Form N-8B-2 (UITs only): ETFs structured as UITs must file registration form N-8B-2 and continue to file annual updates.

Annual reporting:

• Form N-CEN: Annual census form due within 75 days of fiscal year end.
• Form N-PORT: Monthly portfolio holdings (filed quarterly, with third-month holdings made public).
• Form N-PX: Annual proxy voting record due August 31.

Missing deadlines will trigger SEC inquiries and deficiency letters.

Stay current on regulatory changes

Monitor SEC proposed rules, no-action letters, and enforcement actions against other ETFs. Subscribe to SEC alerts at sec.gov/news/whatsnew/wn-rss and review industry association updates regularly.

Prepare for SEC examinations

When SEC examiners arrive, they request daily disclosure records, custom basket documentation, policies and procedures, and evidence of compliance testing. Maintain a centralized compliance file with organized, complete documentation to expedite examinations.

Designate ownership

Assign specific roles to your staff: chief compliance officer (overall program ownership), daily operations lead (pre-market disclosures), custom basket review authority, and recordkeeping administrator. Document all roles in writing with backup coverage.

Action items

1. Create a compliance calendar with all recurring obligations. Include daily updates, quarterly reviews, annual Form N-CEN filing, and policy reviews.
2. Subscribe to SEC regulatory alerts. Assign someone to review new releases monthly.
3. File Form N-CEN. This form must be filed within 75 days of fiscal year-end using a pre-submission checklist to ensure completeness.
4. Formally designate a chief compliance officer. This person should have documented authority, reporting lines, and sufficient resources to fulfill the role.

Rule 6c-11 compliance: final thoughts

Rule 6c-11 compliance comes down to having a detailed, ongoing plan with automation, reliable systems, and experienced personnel. These investments will quickly pay for themselves by reducing errors and making everyday operations a little smoother.

Authorized participants notice which sponsors have their act together. That means when market volatility and premiums swing, you’ll be glad you have systems that can handle it. Getting compliance right from the start is easier than fixing it.

VettaFi helps asset managers at every stage of the product life cycle. If you’re interested in developing an ETF, reach out to one of the experts from our index team now.

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