The SEC’s New ETF Liquidity Rules

August 24, 2015 will certainly go down in the annals of market history. Extremely poor data and unprecedented activity in the Chinese economy/markets spilled over across the globe and hit the U.S. markets especially hard. The Dow Jones Industrial Average fell 586 points, or 3.56%. Likewise, the S&P tanked at 3.9% and the NASDAQ lost 3.82%, with both indexes ending at ten-month lows. At one point, the venerable Dow was down over 1,000 points. The now-dubbed “Black Monday” also had implications besides the plunge in investors’ net worth. All of this market mayhem and volatility caused rules designed to keep trading running smoothly to fail. More than 1,000 ETFs were halted as their prices swung so heavily away from their underlying net asset values (NAVs.) That widespread halt, as well as numerous canceled trades, has been met with some pretty hefty skepticism from regulators. And now, it’s been met with some newly proposed rules governing ETFs.