WASHINGTON, D.C.—Benjamin Schiffrin, Director of Securities Policy, issued the following statement on the filing of Better Markets’ Comment Letter to the Securities and Exchange Commission (SEC) in response to a proposed rule change filed by Cboe BZX Exchange, Inc., to list and trade shares of the BondBloxx Private Credit Trust:

“A private credit exchange-traded product that would be available to retail investors poses all kinds of risks. The assets in private credit funds—non-bank loans—are illiquid, opaque, and hard to value, which is why such funds are normally sold only to institutional and other accredited investors. Even those investors have difficulty valuing loans that rarely trade. And even those investors have suffered massive losses as a result. One can only imagine how retail investors would fare investing in a fund with most of its assets in private credit.

“The proposal does nothing to quell these concerns. It admits that the valuation of the fund’s assets will likely involve ‘subjective judgments,’ and that the value determined for an asset may differ significantly from the value that could be realized upon its sale. It also admits that, in the event the various ways it plans to facilitate liquidity despite the illiquidity of the fund’s underlying assets are insufficient, redemptions may have to be suspended.

“The federal securities laws are supposed to protect retail investors from securities offerings unaccompanied by disclosures that allow them to evaluate the risks.  But private credit is almost entirely unregulated and opaque. The SEC should not allow an end run around the securities laws that uses an exchange-traded product to subject retail investors to private credit assets without the information they need to evaluate the risks.”

The Comment Letter is available here.

###

Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.