The $4 Trillion ETF Market Just Got a Shot in the Arm from D.C.

Wall Street’s main watchdog is cutting back regulatory red-tape for exchange traded funds, potentially triggering faster growth for the $4 trillion market.

After more than a decade of wrangling, the U.S. Securities and Exchange Commission said Thursday that it had eased constraints that the industry argues have slowed down the process of issuing new ETFs. Specifically, the regulator eliminated the need for ETF providers to seek a special order from the agency before funds can be sold to investors.

“As the ETF industry continues to grow in size and importance, particularly to Main Street investors, it is important to have ...