ETFs act in a similar way to mutual funds but track an index and are traded like stocks. It is a relatively underdeveloped part of the market, with the Kuwait Stock Exchange one of the few markets in the region to allow them.

Consortiums have until 17 January to submit proposals to the Egyptian bourse to launch the first ETF that will track the CASE 30 index of leading shares. Both international and local firms have expressed interest in listing ETFs on the bourse.

The market performed strongly in 2007, rising 47 per cent over the course of the year.

The Dubai International Financial Exchange and the Muscat Securities Market have also announced plans to introduce this type of security.

It comes as regional stock exchanges look to diversify their product offering, which is currently dominated by bonds, sukuks and equities.

The London Stock Exchange introduced sharia-compliant ETFs in early December.