Karachi, May 09, 2012 (PPI-OT): Securities and Exchange Commission of Pakistan (SECP) has prescribed the modalities for launching the Index Tracking Exchange Traded Funds by the Asset Management Companies (AMCs) in Pakistan.
According to Alfalah Securities Limited, SECP had earlier approved regulations governing listing and trading of exchange traded funds (ETFs) on the Karachi Stock Exchange. The SECP circular states the regulatory requirements for the authorization of ETFs, including investment restrictions, issuance and redemption of creation units, pricing and dealing, additional disclosure requirements, role of the authorised participants and fees and expenses. ETF is a product in between an open-end and closed-end mutual fund where it continuously issues shares which trade on a stock exchange and authorized participants purchase and redeem ETF shares directly from the ETF in creation units. ETFs would improve the participation in the market providing product diversification and wider investment opportunities.