UAE to launch exchange-traded funds in early 2010

23 October 2009

Esca has drawn up regulations in response to ADX request

The UAE’s capital markets regulator will allow the country’s three stock exchanges to list exchange-traded funds (ETFs), index-tracking funds that trade as individual shares, in the first quarter of 2010.

Obaid Saif Hamad al-Zaabi, director of research and development at the Emirates Securities & Commodities Authority (Esca), says that the authority will allow the Abu Dhabi Securities Exchange (ADX), the Dubai Financial Market and Nasdaq Dubai to introduce the products, which could generate a significant source of revenues for the exchanges.

Although they trade as individual shares, ETFs typically give investors exposure to a whole index by tracking a benchmark, such as an index of an exchange’s largest securities or an index of all the securities in a single sector.

Al-Zaabi says that Esca has drawn up regulations to allow the products to be traded in response to a specific request from the ADX.

The ADX is keen to launch ETFs in an attempt to attract new investors to the exchange.

The Abu Dhabi market has worked on its proposals for ETFs since early 2008 when it revealed plans to launch four funds: two based on indices of Abu Dhabi-based companies, and two based on equity markets in Japan and Taiwan (MEED 20:05:08).

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