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Exchanges Keen to Launch ETFs

An ETF is an investment vehicle traded on stock exchanges, much like stocks and it holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day.

“ETFs, a well established investment vehicle in the US, are gaining popularity in the Gulf region,” Alka Banerjee, Vice President S&P’s Index Services said at Islamic Funds World Middle East 2009 conference on Monday.

The forum was organised to get insights on how issuers, distributors and fund marketers can innovate and devise new strategies to tap into the new sources of wealth across the borders.

Banerjee said that more and more equity trading is done via these products as over 30 per cent of S&P 500 value traded is now traded in ETF format and during stress days, this can be over 50 per cent.

She said that ETF listings in GCC have started but are concentrated along GCC markets less on global access.

Since 1998 when Islamic equity indexing first started, indices were used as benchmarks for long only active funds and that has remained the most popular use till recent time.

Sensible and transparent rules need to be set up to facilitate Shariah markets and trading, she said, adding: “technology to enhance Shariah trading is still growing.” 
— abdulbasit@khaleejtimes.com