SECP approves regulations for exchange traded funds

Introduction of ETFs to allow greater investment flexibility.


Our Correspondent March 05, 2012

ISLAMABAD:


The Securities and Exchange Commission of Pakistan (SECP) has approved regulations governing exchange traded funds (ETFs) for the Karachi Stock Exchange (KSE), according to a press statement issued on Monday.


The regulations broadly cover the listing procedure for ETFs, trading, clearing and settlement of units, disclosure requirements for asset management companies, obligations of authorized participants, fee structure etc. Aspects related to market making by the authorized participants will be covered in the KSE’s regulations for market making. The role of market makers remains crucial in trading ETFs as the arbitrage trades by these participants narrow the gap between ETF market prices and the net asset values of the indexed shares.

Trading in ETFs at the stock exchanges will provide investors with alternative investment avenues through the provision of a diversified portfolio of securities. Internationally, ETFs are among the fastest growing investment products which are being customized to cover specific arrays of regions, sectors, stocks, commodities, bonds, futures and other asset classes.

Published in The Express Tribune, March 6th, 2012.

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